Financial Data and Key Metrics Changes - The biosimulation market has historically grown at a 15% CAGR but has fallen below that over the last couple of years, with the company achieving 10% organic growth during this period [15][18] - The company's revenue guidance was adjusted due to project cancellations and delays, impacting the expected growth trajectory [16][18] Business Line Data and Key Metrics Changes - The business is composed of approximately 60% software licensing and 40% consulting services, with the software side remaining relatively unaffected by recent market challenges [17][20] - Renewal rates for software licenses remain consistent at over 90%, with fluctuations primarily due to client bankruptcies and consolidations [20][21] Market Data and Key Metrics Changes - The drug development industry is facing cost constraints and reduced funding, leading to tighter budgets among clients [14][15] - The FDA's recent announcements regarding the reduction of animal testing requirements are seen as a potential tailwind for the biosimulation market, which could enhance growth opportunities [23][24] Company Strategy and Development Direction - The acquisition of Proficiency has expanded the company's total addressable market (TAM) from $4 billion to $8 billion, allowing for increased opportunities in clinical operations [5][6] - The company is focusing on integrating various modeling and simulation techniques to enhance product offerings and cross-selling opportunities [29][30] Management's Comments on Operating Environment and Future Outlook - Management noted that the drug development industry does not respond well to surprises, which has led to a slowdown in project approvals and contract negotiations [16][18] - The company anticipates a return to a more steady flow of project requests in fiscal year 2026, with expectations of regaining a growth rate closer to 15% [18][19] Other Important Information - The company is launching a cloud-based platform, Astra Plus, which is expected to enhance functionality and accessibility for clients [33][34] - The integration of AI technology into the company's products is a key focus for future development [31][34] Q&A Session Summary Question: What are the expectations for renewal rates and future fiscal year performance? - Renewal rates are expected to remain stable at over 90%, with the service side impacted by client cancellations but the software side performing well [20][21] Question: How is the FDA's movement away from animal models affecting the company? - The FDA's announcements regarding biosimulation and animal testing are seen as positive developments that could lead to increased adoption of the company's tools [23][24] Question: What is the company's growth formula regarding new and existing clients? - Software revenue typically comes from 80% renewals, 10% upsells, and 10% new clients, with a focus on cross-selling opportunities [29][30]

Financial Data and Key Metrics Changes - In H1 2025, group revenues reached €371 million, a 5% decrease compared to 2024, primarily due to an 11% decline in DMPD revenues to €269 million, influenced by a temporary decline in BMS revenues [17][18] - Just Evotec Biologics (JEP) achieved €102.2 million in revenue, reflecting a 16% year-over-year growth, driven by strong demand from non-Sandoz and DoD customers [18][19] - Adjusted group EBITDA was negative €1.9 million, with a strong contribution of €7.5 million from JEP, offsetting lower operational leverage from the DMPD segment [19][20] Business Line Data and Key Metrics Changes - DMPD segment saw an 11% revenue decline, attributed to a temporary effect in the BMS collaboration and continued softness in the early drug discovery market [10][17] - JEP segment outperformed with a 16% revenue growth year-over-year, driven by expanding customer base and strong demand [13][19] - R&D spending decreased by 35% year-over-year, from €29.3 million in 2024 to €19 million in 2025, aligning with strategic focus [19] Market Data and Key Metrics Changes - The biotech funding landscape remains complex, with early-stage investments lagging behind later-stage funding, leading to cautious spending behavior in early-stage R&D [14][15] - Signs of a modest recovery in funding are emerging, with expectations for a more normalized distribution of funding and project flow in the coming quarters [15] Company Strategy and Development Direction - The company unveiled a new strategy in April 2025, focusing on pioneering drug discovery and development, operational excellence, and sustainable profitable growth [5][8] - The business model is evolving towards two core segments: discovery and preclinical development (DMPD) and Just Evotec Biologics (JEP), with an emphasis on reducing complexity and enhancing accountability [9][12] - The planned sale of the Toulouse site to Sandoz is part of the strategy to lean into JEP's capabilities as a scalable technology provider, marking a significant milestone in the asset-light model [13][35] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing market challenges but expressed confidence in the progress made and the transformation efforts underway [5][6] - The company anticipates improved visibility towards midterm goals following the Sandoz transaction, with a bold aspiration of 8% to 12% revenue CAGR and greater than 20% EBITDA margin by 2028 [40][41] - Management highlighted the importance of leveraging technology and scientific leadership to create new business opportunities and enhance value creation [27][30] Other Important Information - The company is navigating a cautious funding environment, particularly in early-stage biotech, while maintaining a strong pipeline and operational rigor [14][15][20] - The expansion of the molecular patient database is a key strategic initiative, enhancing capabilities in precision medicine and drug discovery [23][25] Q&A Session Summary Question: Guidance for 2025 and recovery in funding - Management does not expect a significant impact from VC funding recovery in the second half of 2025 [44][45] Question: Breakdown of R&D business revenues - Management indicated that the transactional part of the R&D business is shrinking relative to integrated and large partnerships, which are growing [46][47] Question: Value transfer from the Sandoz deal - Management emphasized the importance of technology capabilities and ongoing revenue streams from milestones and royalties, but did not provide specific numbers [48][49][53] Question: Trends in DMPD segment and customer spending - Management noted cautious spending behavior among biotech customers and mixed dynamics among pharma partners [56][60][62] Question: Pricing environment and competition - Management acknowledged increased price sensitivity in the transactional segment but emphasized the value provided in integrated partnerships [69][71] Question: Geographic market dynamics - Management observed different market behaviors, with stronger traction in East Asia compared to the US and Europe [73][74] Question: Mix of JEP business revenue sources - Management stated that current revenue from JEP is a package of drug production and licensing, with a focus on monetizing assets fully [75][78] Question: Rationale for the sale of the Toulouse site - Management reiterated that the sale aligns with the strategic direction and timing for the company [86] Question: Kidney disease projects and revenue proportion - Management highlighted ongoing investments in kidney disease research and partnerships with major pharma companies [90][91] Question: Customer base for JEP growth - Management confirmed that growth in JEP is derived from a mix of small and large pharma customers, primarily in earlier-stage development [94]

FDA Regulation and Drug Approval - The FDA's drug and biological approvals, including gene therapies, are under scrutiny following the departure of Dr Assad [3] - The FDA commissioner aims to recalibrate standards for more efficient regulatory pathways, leveraging AI and big data to improve the drug approval process [10][11] - The industry anticipates the incoming head of the division handling biologics to share the same priorities of improving the FDA and facilitating innovation [12] - The FDA is considering approving rare disease therapies at the first sign of promise, recognizing the lack of meaningful disease-modifying options for these patients [19] Gene Therapy and Clinical Trials - A gene therapy from Sarepta Therapeutics for Duchenne muscular dystrophy faced safety concerns due to patient deaths, leading to a temporary halt of shipments [4][5] - Patient advocacy groups expressed devastation over losing the gene therapy option, which could potentially halt or reverse disease progression [6] - Acute liver failure was linked to the deaths of teenage boys in the Sarepta Therapeutics trial, potentially due to higher doses per kilogram in older patients [13][14] - AI can be embedded into clinical trials to simulate and explore avenues, potentially preventing patient deaths and improving the success rate of getting the right drugs to the right patients faster [16][17] Genomics and AI - The industry is excited about the potential of gene editing for common diseases like cardiovascular disease, building on the proof of concept in rare diseases [21] - CRISPR Therapeutics is developing gene editing therapies targeting genes involved in liver metabolism to address cardiovascular disease [22] - Advances in AI are unlocking new possibilities in genomics, enabling better target design, faster pre-clinical studies, and improved clinical trial design [30][31][32]