Evotec SE

Good morning, good afternoon to all of you in this call. We have a lot to cover today and I'll keep my part very short. So let's move on to cover the housekeeping items on page two. We share the cautionary language here as usual and some statements will be future looking based on information available today and they might be subject to change in future. But now let me hand over to our CEO, Dr. Christian Wojciechowski. Christian, please.

Thank you, Volker. Good morning and good afternoon to everyone. It's a pleasure to welcome you all to this call. I'm looking forward to taking you through the progress we've made over the past six months of transition since the announcement of our new strategy. Very pleased with the momentum and high speed of our transformation toward better monetizing our technology leadership. The steps we've taken in the past couple of quarters are a strong fundament for our value creation path and for the execution of our midterm outlook. I'm confident that this will become more visible to you while we lead you through this presentation. Let us now take a closer look at the year-to-date performance. In the first nine months, group revenues landed at 535.1 million euros, which is a 7% decline versus the previous year. This is driven by our DMPD business where we face continued softness in the early drug discovery market, leading to 12% revenue decline. In contrast, our biologics business, JAB, remains on a strong growth path, with plus 11% growth in the first nine months. As mentioned in the last call, we expect the trend in DMPD to continue in the second half of 2025, while for just Avotech Biologics, we anticipate revenue growth to further accelerate. Taking a closer look into the DNPD business, we see several main elements driving past and future performance. Talking about the early drug discovery market environment, the VC funding for Biotech is certainly not yet favorable, affecting the business development activities of the transactional service business. However, Over the last two quarters, the number and value of proposals going out from Avotech to customers is clearly trending upward, indicating that the business is stabilizing. Also, the level of negative change order volumes in Q3 has substantially improved versus first two quarters. In the meanwhile, we've taken appropriate actions to adjust our cost base. We've introduced a new organization structure And we're strengthening our commercial and operational capabilities. 12 months ago, we were targeting 30 million of cost out in 2025. We raised the bar over the course of the year. And during the last call, we committed to 60 million of cost out. And we will stay ahead of plan. As announced last call, we're working on delivering additional 50 million of cost out and productivity measures in future. you should expect a full update on the initiatives we're working on during our next call. The business momentum with strategic partnerships remains healthy, ensuring continued mid-term revenue streams. Those strategic partnerships are expected to also result in meaningful progression of our asset portfolio over the next six to nine months. several catalysts lie ahead of us, leading to the transition of molecules from the early drug discovery stage into preclinical and from preclinical into clinic. And I'm pleased to announce today that we're expecting up to four molecules from our partnered acid pipeline to be in phase two clinical studies in 2026. This is exciting news for Evertech, as it demonstrates the scientific strength and the outstanding capability of our technology. And it underpins our plan to generate meaningful upside through milestone and royalty payments in future. More about this a bit later. At Just Evotech Biologics, we're making great progress in our efforts to diversify and broaden our customer portfolio. Business development with a non-Sandoz and non-DOD business is moving fast. The momentum for this part of the business has further accelerated versus half-year results to now over 100% growth after nine months. Moreover, we signed a transformational deal between Just Evotech Biologics and Sandoz just hours ago. This landmark transaction is a strong testament to our cutting edge technology and capabilities in the fast growing biologics business. It will unlock payments of more than $650 million over the next years. In addition, we expect to generate sizable revenues from royalty streams related to 10 biosimilars. We're extremely excited and proud to have been selected as partner by Sandoz on their path to shaping the biosimilars market. In a nutshell, we're well on track with our strategy, driving both scientific and operational excellence. Since the VC funding for biotech customers is relevant for approximately 30% to 40% of our revenue base in DNPD, let me share some further background information about the market trend. Updated data on total venture capital funding environment shows no material change compared to the analysis we shared in August. The absolute funding level has not grown over the past two quarters. The share related to discovery and preclinical stage companies remains well below pre-pandemic levels. suggesting a continuing short-term investment focus on companies with clinical stage assets. We spoke about the temporary deprioritization of early discovery and development activities and funding. It needs to be overcome before we see a forceful recovery of the early drug discovery market. That said, we do see some encouraging developments. Negative change orders are normalizing and customer activities are increasing. In the first half of 2025, the balance between positive and negative change orders was impacted by higher than expected cancellation volume, contributing to a weaker sales performance in DMPD. This effect was related to a small number of contracts which were canceled by customers either for strategic or scientific reasons. In Q3, we're back to normal levels. The development of our change order balance is shown in the upper graph. In contrast to the comparably low funding activities for early stage biotech, the business activity level at Evotech has picked up. The number of proposals issued to our customers has grown 20% over the past two quarters, and this is also in line with a growth in total value of proposals. Even though those early indicators are promising, we're not yet indicating a change of trends. We remain vigilant in monitoring market developments and continue to adopt to our customers' evolving needs in a more agile way. In parallel, We are building a more targeted go-to-market approach. And as mentioned last time, we're strengthening our commercial organization. I'd like to now hand over to Paul, who will guide you through our financial results.

Thank you, Christian, and a warm welcome from my side. Let me guide you through our year-to-date results in a little more detail. Our first nine months' group revenues reached 535 million euros. 7% decline versus the same period in 2024 and is aligned with our expectations. Firstly, our D&PD revenues declined by 12% to 391.9 million euros in a persisting soft market in early drug discovery, as Christian commented on in his introduction. Also, as mentioned last time, included in this result is the expected temporary decline in the BMS revenues. Our JustEvaTech biologics business continues to grow strongly in the first nine months of the year and is on track for a very strong 2025. For the first nine months of 2025, revenues reached 143.2 million euros, which is up 11% versus the first half of 2024. As we mentioned last time, we continue to see a broadening of our customer base with non-Sandoz and non-DOD customers growing 105% in the first nine months versus last year. During the first nine months of 2025, our Sandos business grew low single digits. Although, as we look forward, we expect meaningful full-year growth following the completion of the recently announced transaction, which will include multi-year consideration for technology access, development revenues, and product royalties. Our R&D spending remains on the trajectory shared last time and is reduced by 33% versus prior year period, from 41.1 million euros in the first nine months of 2024 to 27.7 million euros in the first nine months of 2025 as we direct our investments to those most relevant for our partners. Adjusted group EBITDA reached negative 16.9 million euros driven by the weaker than expected DMPD revenues and our fixed cost base. We are well on track with our cost-out initiatives to deliver the 60 million euros of in-year structural cost reduction in 2025 that we communicated in our last call. We also remain focused on delivering the additional mid-term cost and productivity actions that we discussed in our April update. Our JustEvaTech biologics business remains ahead of expectations, helped by positive operating leverage despite the planned JPOD build-out. Bridging to our full-year outlook, we expect our fourth quarter profile to reflect the higher revenue contribution weighting that we have seen in prior years. In addition, our recent guidance update in July reflected lower full-year DMPD revenues with an overall improved business mix, including the effects of the events announced last night. Now continuing with cash flow. Our year-to-date free cash flow has improved by 14% versus the same period last year. This is despite our third quarter operating cash flow having a tough comparable to last year when we received $125 million of BMS payments, whilst the recently announced BMS Neuro payments has only been received in the fourth quarter of this year. However, in line with our expectations, our investing cash flow continued to see sequential improvements as we drive more rigor in our capex investment processes whilst also completing the JPOD build-out. Our net debt levels grew versus the second quarter of 2025, which also reflected the higher lease obligations following the adoption of a long-term lease agreement in our Hamburg facility. Following the completion of our transaction with Sandoz, planned in the fourth quarter of this year, we expect our liquidity to be in a significantly stronger position with a residual long-term debt portfolio. With that, I hand over to Cord.