Evotec continues expansion

Evotec AG ended the 2017 first quarter with a broader revenue base, two new drug discovery agreements and Novo A/S as a strategic shareholder to help the company execute its strategy as a service provider and research partner for the global pharma industry.

Revenue for the quarter rose by 34% to €50.2 million, a result that includes €6 million in sales from the contract research organisation Cyprotex Plc which Evotec acquired in late 2016. The figure also includes €6.2 million in upfront and milestone payments largely from Bayer AG and Sanofi SA for progress in drug discovery projects, respectively for kidney disease and diabetes. Evotec is also working with Bayer to discover non-hormonal treatments for endometriosis, and with Pfizer to discover drugs targeting fibrosis.

For the quarter, the company reported a revenue increase of 24% for its service business and a rise of 96% for its academically-focused research alliances. In the latest period the company initialed new drug discovery agreements with Dermira Inc of the US and Asahi Kasei Pharma of Japan.

A key project in the research segment is an alliance with Sanofi SA in diabetes under which the companies are using induced pluripotent stem (iPS) cells to derive human beta cells for compound screening and therapy development. The two companies have an eye on a beta cell replacement therapy for diabetes. Evotec also has an alliance with Celgene Corp to identify new therapies for neurodegenerative diseases using the iPS cell platform.

In a call with analysts on 10 May, Cord Dohrmann, Evotec’s chief scientific officer, predicted that iPS cells would become a standard screening tool in neuroscience in the future.

Evotec reported earnings before interest, taxes, depreciation and amortisation (EBITDA) of €13.2 million in the quarter, up from €7.2 million a year earlier. The figures have been adjusted to exclude impairments. Spending on research and development increased by 6% to €4.7 million. Largely due to a €90.3 million share placement with Novo A/S in February, Evotec ended the quarter with liquidity of €185 million compared with €126.3 million on 31 December 2016. Werner Lanthaler, the chief executive, said the company expects revenue to increase by more than 15% this year.

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