Evotec SE Fiscal Year 2019 Results: Excellent 2019 Performance; Very Good Outlook for Continued Growth 2020
Thursday, 26 March 2020 () · *VERY STRONG FINANCIAL RESULTS: 19% INCREASE IN GROUP REVENUES, ADJUSTED GROUP EBITDA UP 29%*
· *VERY STRONG YEAR END FINANCIAL POSITION AT € 320 M*
· *UNIQUE EVT EXECUTE INNOVATION PLATFORM SUPPORTS LONG-TERM GROWTH *
· *SIGNIFICANT EXPANSION OF EVT INNOVATE CO-OWNED PORTFOLIO TO > 100 PROJECTS IN SMALL MOLECULES, BIOLOGICS, AND CELL THERAPIES*
*HAMBURG, GERMANY / ACCESSWIRE / March 26, 2020 / *Evotec SE (Frankfurt Stock Exchange: EVT, MDAX/TecDAX, ISIN: DE0005664809) today reported financial results and corporate updates for the fiscal year ended 31 December 2019.
*FINANCIALS REFLECT STRONG GROWTH*
· Group revenues up 19% to € 446.4 m (2018: € 375.4 m)
· Adjusted Group EBITDA up 29% to € 123.1 m (2018: € 95.5 m)
· Unpartnered R&D expenses of € 37.5 m (2018: € 22.8 m)
· Liquidity position more than doubled to € 320.0 m (31 December 2018: € 149.4 m)
*"ACTION PLAN 2022" ON TRACK, DESPITE MASSIVE GLOBAL INSECURITIES*
· Multiple new and extended strategic drug discovery and development alliances, e.g. expansion of agreement with Sanofi to create a centralised global sample management hub in Toulouse; multiyear agreement with Takeda; new precision medicine initiatives in women's health and oncology
· Continued strong performance and growth in all EVT Execute service offerings at all sites
· Successful start of Just - Evotec Biologics integration; Construction and ramp-up of first J.POD^(R) in Seattle initiated; first J.POD^(R) partner MSD signed up (in January 2020)
· Significant expansion and progress in partnered pipeline; e.g. positive clinical Phase II POC results in chronic cough with Bayer and several clinical Phase I & Phase II starts
· Multiple important milestone achievements, e.g. in iPSC-based drug discovery alliances
· Focus on "omics", machine-learning and artificial intelligence platforms in all modalities
· Formation of spin-off Breakpoint Therapeutics on DNA damage response; joint venture NephThera created with Vifor Pharma focused on novel nephrology therapeutics
· Academic BRIDGE model continuous to mature and gain momentum
· Building a leading position in anti-infectives drug discovery and development (e.g. alliances with GARDP, GNA Now, Helmholtz, and the Bill & Melinda Gates Foundation)
*FINANCIAL GUIDANCE 2020 - CONTINUED STRONG ORGANIC GROWTH*
Given current global insecurities surrounding the COVID-19 pandemic, a likely negative impact is already estimated within the introduced guidance for revenues and adjusted EBITDA. It is not possible to precisely predict or quantify the potential impact on revenue and financial performance at this early stage. This uncertainty also explains the broader than usual ranges. Evotec will continue to very closely monitor the further development of this exceptional situation and update on guidance in case the situation changes materially.
· Group revenues expected to be in a range of € 440 - 480 m (2019: € 446.4 m including revenues from material recharges according to IFRS 15)
· Adjusted Group EBITDA expected to be on the similar level as in 2019, € 100 - 120 m (2019: € 123.1 m)
· Unpartnered research and development expenses expected to be approx. € 40 m (2019: € 37.5 m)
*FINANCIALS REFLECT STRONG GROWTH*
*Key figures of consolidated income statement & segment information*
Evotec SE & subsidiaries
In T€ *EVT*
*Innovate^2)* *Evotec Group*
*2019^1)* *Evotec Group*
External revenues 337,605 94,329 446,437 375,405
Intersegment revenues 82,698 - - -
Gross margin in % 26.0 34.6 29.8 29.8
R&D expenses^3) (2,144) (65,498) (58,432) (35,619)
SG&A expenses (52,524) (14,022) (66,546) (57,012)
Impairment result (net) - (11,919) (11,919) (4,364)
Income from bargain purchase - - - 15,400
Other operating income (expenses), net 22,027 44,573 66,600 47,042
*Operating result* *76,807* *(14,213)* *62,594* *77,463*
*Adjusted EBITDA^4),5)* *122,507* *636* *123,143* *95,457*
1) Data including reclasses of recharges according to IFRS 15
2) Revenues in the segments consist of revenues from contracts with customers without revenues from recharges as those are not of importance for the management to assess the economic situation of the segments.
3) Thereof unpartnered R&D expenses of € 37.5 m 2019 and € 22.8 m in 2018
4) Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total non-operating result.
5) Including first-time application of IFRS 16, positively affecting adjusted EBITDA by € 15.5 m
In 2019, Evotec's Group revenues increased by 19% to € 446.4 m (€ 431.9 m excl. IFRS 15) (2018: € 375.4 m / 2018 excl. IFRS 15: € 364.0 m). This increase resulted primarily from the growth performance in the base business, increased milestone payments and a positive contribution from the acquired business of Just - Evotec Biologics (€ 16.1 m) in the 2^nd half of the year. Full year impact from IFRS 15 amounts to € 14.5 m (2018: € 11.4 m). In total, revenues from milestones, upfront payments and licences increased by 32% to € 39.0 m in 2019 (2018: € 29.5 m), mainly due to milestone payments from existing long-term alliances as with Bayer in endometriosis/chronic cough and kidney diseases, from Evotec's iPSC-based collaborations with Bristol-Myers Squibb/Celgene in neurodegeneration as well as from Sanofi in diabetes.
In 2019, Evotec focused its unpartnered R&D expenses of € 37.5 m (2018: € 22.8 m) primarily on initiatives in the fields of metabolic diseases, oncology, and platform projects. Platform investments focused in particular on the continued expansion of Evotec's industry-leading iPSC platform as well as industrialisation and integration of "omics", artificial intelligence ("AI") and machine learning, as well as data analytics platforms. Its partnered R&D expenses of € 20.9 m (2018: € 12.7 m) related to its infectious disease portfolio were predominantly reported as R&D expenses while the costs fully reimbursed by its partner Sanofi were recognised under other operating income and thus do not negatively affect the operating result or adjusted EBITDA. This split into unpartnered and partnered R&D expenses has only been applied since July 2018 when the Lyon site was acquired from Sanofi.
In 2019, the Group's selling, general and administrative ("SG&A") expenses increased by 17% to € 66.5 m (2018: € 57.0 m). This increase resulted primarily from first full year SG&A expenses of Evotec ID Lyon, first half year contribution of Just - Evotec Biologics, higher personnel expenses due to growth and temporary staff costs due to a strengthening of the support functions, higher consultancy fees as well as M&A and financing related expenses.
In 2019, Evotec recorded impairments of intangible assets of € 11.9 m (2018: € 4.2 m) for the full impairment of SGM-1019 and related goodwill. This one-off impairment was mainly due to the termination of the SGM-1019 agreement by Evotec's partner Second Genome.
Adjusted Group EBITDA for 2019 increased by 29% to € 123.1 m (2018: € 95.5 m), yielding an adjusted EBITDA margin of 27.6% (2018: 25.4%), mainly due to very strong performance in the base business, milestones and licence contributions, a positive EBITDA contribution by Just - Evotec Biologics and effects from the first-time application of the new accounting standard IFRS 16.
Evotec's operating result amounted to € 62.6 m in 2019 (2018: € 77.5 m). A year-on-year comparison is not meaningful, as the 2018 result was significantly positively affected by a one-off impact from the bargain purchase ID Lyon (€ 15.4 m). The higher gross profit in 2019 was off-set by the significantly increased investments in R&D and the impairment of the intangible asset SGM-1019 and the related goodwill. The Company's net result for the year 2019 amounted to € 37.2 m (2018: € 84.1 m) and also cannot be compared like for like as it was affected by the one-off effect of the bargain purchase in 2018 and deferred tax income.
Evotec ended the year 2019 with a liquidity of € 320.0 m (2018: € 149.4 m), which was composed of cash and cash equivalents (€ 277.0 m) and investments (€ 42.3 m). Cash and cash equivalents as well as current investments can be accessed within a period of less than three months. The increase in liquidity in 2019 resulted mainly from the issuance of the promissory note ("Schuldscheindarlehen") in the amount of € 249.1 m net and a positive operating cash flow of € 42.2 m (2018: € 156.2 m).
*MID-TERM STRATEGY ON TRACK TO ACHIEVE SERVICE INCOME, MILESTONES, AND ROYALTIES*
The EVT Execute segment continued to demonstrate strong progress in 2019 with new and extended alliances (e.g. Sanofi, Takeda). In 2019, Evotec was involved in 769 alliances and recorded a repeat business of 92%. Following the acquisition of Just Biotherapeutics, now Just - Evotec Biologics, in July 2019, Evotec was able to sign agreements with Teva, Biocon and, after period-end, with MSD and OncoResponse. The step into biologics is already showing significant scientific synergies and cross selling potential across the Evotec alliances.
In EVT Innovate, 2019 was characterised by important progress and strong milestone income in its strategic partnerships (iPSC neurodegeneration alliance with Bristol-Myers Squibb/Celgene; iPSC diabetes alliance with Sanofi; kidney disease and endometriosis/chronic cough alliances with Bayer) as well as the signing of new partnerships, amongst others with Galapagos in fibrosis, with the Mark Foundation in immuno-oncology, with Indivumed in oncology as well as with Bayer and Celmatix in women's health. In July 2019, Evotec was able to report significant clinical progress within its multi-target alliance with Bayer by achieving phase II POC in chronic cough with the P2X3 antagonist BAY1817080. Evotec expects further clinical evaluation of this promising programme by Bayer in 2020. Other partnered clinical projects are progressing according to plan.
Evotec and Vifor Pharma launched NephThera, a joint venture focused on the discovery and development of novel nephrology therapeutics. Both companies will hold a 50% share (transaction closed early 2020). Furthermore, Evotec and a venture capital consortium formed the Company's second spin-off, Breakpoint Therapeutics. The Company made further new investments in promising Biotech companies as Aeovian Pharmaceuticals, Celmatix and Immunitas Therapeutics and continued to financially support already existing holdings. Additionally, Evotec made significant progress with its leading iPSC platform as well as the industrialisation and integration of "omics", AI and machine learning, and as data analytics platforms.
In the field of anti-infectives, Evotec closed additional collaborations, e.g. kicking off "GNA Now", a new initiative for the development of novel antibacterial agents. The increasing recognition of antibiotic resistance as a growing threat to public healthcare systems enabled Evotec to receive grants for projects to further accelerate drug discovery efforts in this area of high medical need. Evotec initiated multiple partnerships with the Bill and Melinda Gates Foundation (especially in Tuberculosis).
In 2019, Evotec's academic BRIDGE model continued to attract significant interest from academia and industry partners, leading to the building of LAB10x and LAB555.
*FINANCIAL GUIDANCE 2020 - CONTINUED STRONG GROWTH*
Given current global insecurities surrounding the COVID-19 pandemic, and possible future disruption of business within Evotec and our partners, guidance for 2020 has been critically assessed. However, due to the drastic and very dynamic developments in the overall economic environment since the end of February 2020 and the unforeseeable special situation triggered by the COVID-19 pandemic and its associated unknown time lines, it is not possible to precisely predict or quantify the potential impact on revenue and financial performance at this early stage. This uncertainty also explains the broader than usual ranges. Evotec will continue to very closely monitor the further development of this exceptional situation and update on guidance in case the situation changes materially.
Revenues, research and development expenses, and adjusted EBITDA remain the financial key performance indicators of the Evotec Group.
For the financial year 2020, the Management Board expects Evotec's total Group revenues in a range of € 440 - 480 m. This anticipated revenue growth is based on visibility of the current order book, expected new contracts, contract extensions and milestone opportunities. Projections are based on constant 2019 exchange rates.
Evotec's adjusted Group EBITDA is expected to be in the range of € 100 - 120 m despite increased R&D investments, expected loss of the Sanofi subsidy for the Toulouse site after Q1 2020 and significantly ramping up the Just - Evotec Biologics business by investing in and building highly innovative J.POD^(R) capacities in the USA.
Evotec will continue to significantly invest in its own "unpartnered" research and development (R&D) to create a long-term pipeline of first-in class assets and platforms. Evotec expects these expenses to be at approx. € 40 m. These expenses are independent of the "partnered" R&D spending in infectious diseases, which is fully covered under the Sanofi partnership.
*Guidance* *2020* *Actual 2019*
Group revenues from contracts with customers € 440 - 480 m^2) € 446.4 m
Unpartnered R&D expenses Approx. € 40 m € 37.5 m
Adjusted Group EBITDA^1) € 100 - 120 m^2) € 123.1 m
1) EBITDA is defined as earnings before interest, taxes, depreciation, and amortisation of intangibles. Adjusted EBITDA excludes contingent considerations, income from bargain purchase and impairments on goodwill, other intangible and tangible assets as well as the total non-operating result
2) Despite the loss of € 20 m subsidy payments from Sanofi and significantly ramping up J.POD^(R) capacities*Webcast/Conference Call*
The Company is going to hold a conference call to discuss the results as well as to provide an update on its performance. Furthermore, the Management Board will present an outlook for fiscal year 2020. The conference call will be held in English.
*Conference call details*
Date: *Thursday, 26 March 2020*
Time: *02.00 pm CET (09.00 am EDT, 01.00 pm GMT)*
From Germany: +49 69 201 744 220
From France: +33 170 709 502
From Italy: +39 02 3600 6663
From the UK: +44 20 3009 2470
From the USA: +1 877 423 0830
Access Code: 97681453#
A simultaneous slide presentation for participants dialling in via phone is available at https://webcasts.eqs.com/evotec20200326/no-audio.
To join the audio webcast and to access the presentation slides you will find a link on our home page www.evotec.com shortly before the event.
A replay of the conference call will be available for 24 hours and can be accessed in Europe by dialling +49 69 201744221 (Germany) or +44 20 3364 5150 (UK) and in the USA by dialling +1 (844) 307-9362. The access code is 315578854#. The on-demand version of the webcast will be available on our website: www.evotec.com/financial-reports*NOTE*
The 2018 and 2019 results are not fully comparable. The difference stems from the acquisitions of Just - Evotec Biologics (effective 02 July 2019) and Evotec ID (Lyon) SAS (effective 01 July 2018).The results from Just - Evotec Biologics are only included from 02 July 2019 onwards while the results from Evotec ID (Lyon) SAS are only included from 01 July 2018 onwards.
From 01 January 2018 onwards, Evotec applies IFRS 15 and IFRS 9. From 01 January 2019 on, Evotec applies also IFRS 16.
Evotec is a drug discovery alliance and development partnership company focused on rapidly progressing innovative product approaches with leading pharmaceutical and biotechnology companies, academics, patient advocacy groups and venture capitalists. We operate worldwide and our more than 3,000 employees provide the highest quality stand-alone and integrated drug discovery and development solutions. We cover all activities from target-to-clinic to meet the industry's need for innovation and efficiency in drug discovery and development (EVT Execute). The Company has established a unique position by assembling top-class scientific experts and integrating state-of-the-art technologies as well as substantial experience and expertise in key therapeutic areas including neuronal diseases, diabetes and complications of diabetes, pain and inflammation, oncology, infectious diseases, respiratory diseases, fibrosis, rare diseases and women's health. On this basis, Evotec has built a broad and deep pipeline of approx. 100 co-owned product opportunities at clinical, pre-clinical and discovery stages (EVT Innovate). Evotec has established multiple long-term alliances with partners including Bayer, Boehringer Ingelheim, Bristol-Myers Squibb, CHDI, Novartis, Novo Nordisk, Pfizer, Sanofi, Takeda, UCB and others. For additional information please go to www.evotec.com and follow us on Twitter @Evotec.
*FORWARD LOOKING STATEMENTS *
Information set forth in this press release contains forward-looking statements, which involve a number of risks and uncertainties. The forward-looking statements contained herein represent the judgement of Evotec as of the date of this press release. Such forward-looking statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, and which could cause actual results to differ materially from those contemplated in these forward-looking statements. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based.*Fiscal year 2019 results*
*Key figures of consolidated income statement*
Evotec SE and subsidiaries
In T€ except share data and per share data
31 December 2019 31 December 2018 Change in %
Revenues from contracts with customers 446,437 375,405 18.9
Gross margin in % 29.8 29.8 (0.1)PP
Research and development expenses (58,432) (35,619) 64.0
Selling, general and administrative expenses (66,546) (57,012) 16.7
Impairment of intangible assets (11,919) (4,364) >100
Income from bargain purchase - 15,400 -
Other operating income (expenses), net 66,600 47,042 41.6
*Operating result* *62,594* *77,463* (19.2)
*Adjusted EBITDA^1)* *123,143* *95,457* 29.0
*Net income* *37,228* *84,056* (55.7)
Weighted average shares outstanding 149,725,607 147,482,051 1.52
*Net income (loss) per share (basic)* *0.25* *0.57* (56.1)
*Net income (loss) per share (diluted)* *0.25* *0.56* (55.4)
^1) Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total non-operating result
^1) Revenues in the segments consist of revenues from contracts with customers without revenues from recharges, as those are not of importance for the management to assess the economic situation of the segments.
^2) Adjusted for changes in contingent considerations and impairments on goodwill, other intangible and tangible assets as well as the total non-operating result
1) Before contingent considerations, income from bargain purchase and excluding impairments on goodwill, other intangible and tangible assets as well as the total non-operating result
*Key figures of consolidated statement of financial position*
Evotec SE and subsidiaries
31 Dec 31 Dec Change 2019 2018 in %
Cash, cash equivalents and investments 320,022 149,449 >100
Working capital (8,716) (39,036) (77.7)
Current and non-current loan liabilities and finance lease obligations 463,099 114,465 >100
Total stockholders' equity 477,029 424,880 12.3
*Total assets* *1,180,912* *771,883* *53.0*
*SOURCE: *Evotec AG via EQS Newswire
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