Evotec SE(US:EVO)2021-08-11 18:36Financial Data and Key Metrics Changes - The company reported a 17% increase in revenue for H1 2021, with a strong 27% organic growth when adjusted for foreign exchange and portfolio effects [13] - Gross margin decreased to 20.8% from 23% year-on-year, primarily due to the end of the Sanofi subsidy for the Toulouse site [14] - R&D expenses increased by 90% compared to last year, driven by enhancements to multiple platforms and the co-owned pipeline [14] - Net income for H1 2021 amounted to €111.9 million, benefiting from a positive one-off effect from the fair value upgrade of the Exscientia/Evo equity engagement [17] Business Line Data and Key Metrics Changes - Execute revenues grew by 18% year-to-date, driven by increasing demand for integrated offerings and a strong base business [21] - Innovate revenues reached €57.3 million, a 27% increase, reflecting high demand for precision medicine and new partnerships [22] - Innovate's adjusted EBITDA was negative at €15.7 million, primarily due to increased R&D and SG&A investments [23] Market Data and Key Metrics Changes - The company experienced a negative currency effect of €11.5 million due to a weakened US dollar against the euro [25] - The order books are at record levels, indicating strong long-term demand across all offerings [11] Company Strategy and Development Direction - The company aims to create the largest royalty pool in the industry by co-owning valuable assets, with a focus on long-term value creation [44] - The J.POD initiative is a strategic response to the anticipated global shortage of biologics capacity, with plans for expansion in both the US and Europe [42][71] - The company is committed to integrating AI and machine learning across various modalities, enhancing productivity and precision in drug discovery [61][64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the second half of 2021, anticipating substantial additional income from milestones originally expected in Q2 [20] - The company is closely monitoring inflation and input costs but currently does not expect immediate impacts due to strong stock levels and increased buying power [81] - The company confirmed its guidance for 2021, expecting strong news flow and a top line of €550 million to €570 million [57] Other Important Information - The company is pursuing a dual listing on NASDAQ to increase engagement with US institutional investors and support growth initiatives [35][86] - The company is actively involved in social responsibility initiatives, particularly in response to the COVID-19 pandemic, aiming to improve access to therapeutics globally [50][101] Q&A Session Summary Question: Trends in AI-based drug discovery and Evotec's positioning - The company applies machine learning across various modalities, leveraging data from top pharma and biotech partners to enhance productivity [61][62] Question: Cold Spring Harbor lab collaboration focus - The collaboration aims to translate ideas across all modalities, not limited to biologics [66] Question: Timeline for J.POD 1 manufacturing capacity - Full capacity for the first two trains is expected within the next 24 months, driven by business demand [70] Question: Guidance on adjusted EBITDA - The company is optimistic about the second half due to expected data points and novel transactions, despite the inherent volatility of milestone payments [76][78] Question: Update on Phase III compound with JingXin - JingXin has accelerated recruitment for their clinical trial, and the company remains optimistic about their progress [80] Question: NASDAQ listing expectations - The dual listing aims to increase visibility and attract US-based investors, with no urgent financing pressure [86][87] Question: Protein degradation agreement with BMS - The company is actively involved in protein degradation and has expanded its partnership with BMS into new disease areas [95][96]