Q3 2021 Evotec SE Earnings Call
Okay.
Dear, ladies and gentlemen, welcome to the conference call, Steve I check assay.
As our customers' request this conference will be recorded.
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May I now hand, you over to run a lot that I see I would lead you through this conference. Please go ahead.
Thank you. So much this is Dennis speaking from Eva Pik.
Good afternoon, and good morning from Sunny Ambac.
We are here presenting to you the nine months results of Evo Tech.
Which we have highlighted on the rapid progress on the data driven outbound to cures, we have uploaded a presentation for your convenience and please follow this presentation throughout.
This 35 minutes that Andrew and I will conduct for you.
When you go to the first page of this presentation.
Should see that I'm here together with our CFO and Craig and CT are also on this call and he will be happy to answering questions. After the initial presentation.
Yeah.
When you go to page number four of this presentation.
You should see that.
That we are in a strong pushes position.
Actually it's maybe fair to say that the company is in a very strong position.
Why do we say this because the overall performance.
On all of them.
Names of our data driven R&D out onto cures is strong yes, it's very strong.
Q3 shows many important and consistent steps forwards.
So overall, we see our.
Evil innovate based business Oh, sorry.
Evil eye R&D based business in a very strong shape.
We see positive momentum across all business lines.
And we already see very good good business momentum into 2022, and given the long term nature of our contracts also into 'twenty three.
Page four also shows you some single events that I want to highlight that are supporting our unique business model.
Let me highlight here for example, the recently announced clinical start with our partner BMS with a highly innovative target in order generation.
Let me also highlight here the progress that we made over all in building our evil royalty pool with multiple clinical events that are either showing even more visible visibility towards the market.
Bayer with our Pizza Excrete war singing pharma by going forward into market registration in China.
Or by caveat partner working in highly innovative oncology indications coming from Evo <unk> targets that we have built here.
There are not many low lights that we want to mention but of course, we also are suffering a bit from ongoing supply chain and ongoing I.
I would say stickiness in the overall flow of products amongst our network.
If you go forward.
Let me show you a numbers of the full year. So far end of Q3 and in detail, where you see that we can happy to confirm our full year guidance and also has a very good increased visibility to all our overall strategy extra <unk> 2025.
So also here, we are confirming our aspirations from extra <unk> 25.
And nobody can give you more detail on all of this fleet.
Page six.
Highlights that we completed.
Our NASDAQ listing is this an IPO is a secondary listing it's a bit unclear because as you know Eva pick was listed about a decade ago, you will take ease of public company for many years already it doesn't matter. We are so happy that we made a fantastic debut again on NASDAQ.
And we are so happy that the investors, who followed us I exactly.
The group of investors, who we wanted to target to achieve certain goals.
Why do I say certain goes because we've been very clear with our use of proceeds that we wanted to raise that we want to use.
Because you will see after making very clear statements why.
We went public action will follow.
And action will follow in the following direction that we want to expand and scale up the global presence of our network of trade pumps, we want to expand our precision medicine technology platforms.
Fighting with our World class induced pluripotent stem cell platform.
Expanding our protein degradation platforms, and massively upscaling, our patient data generation analytics and AR.
In generation platforms, Panamax Pan Hunter, which are coming on top of building molecular patient databases, which are fundamental to our long term strategy.
And also we will continue to invest into our Unpark net R&D and building the best platforms, but also accelerating the asset building on our platforms.
And on top of that we will.
Even go deeper and broader in our Evo equity strategy, which we have also announced behind our NASDAQ listing.
With this again, let me thank you for allowing us to step to a global presence of Evo Tech.
And with this also let me introduce to you know with our detailed look into the numbers of Q3.
Thank you Panna and a truly warm welcome also to all of you from my side afternoon, or good morning, respectively, and let me start or continue on page number eight and here with a nine month 2021 numbers, which show an excellent 20% increase on our revenue line and this is substantially pushed.
And by the positive development of our base business and the realization of two BMS milestones in September 2021.
Adjusted for the FX and for our portfolio effects, we even would recognize the 26% gain in revenue growth.
And I would come back to the further analytics of the growth sectors on page 12.
The gross margin amounted to 23, 1% lower than last year's 24, 7% and this is mainly due to the after mentioned and end of the Sanofi the subsidy for a site introduced after Q1 'twenty.
Adverse.
FX effects in 2021.
If adjusted for both irrespective affects gross margin in 2021 year to date would come in at a.
24, 6% versus 22, 9% in 'twenty 'twenty.
The planned increase in <unk> expenses by 28%.
Leads to an eight sorry, two and 16% growth in the overall R&D expenses.
This development is especially driven by further enhancing our multiple platforms has been adjusted indicated and accelerating our pipeline.
The increase of 20% in SG&A expenses versus last year's mainly caused by increasing head count and costs for secondary NASDAQ listing and there is in this position.
Disposition of generally reflects our continuous growth efforts for example for ramping up our new operational J put in Redmond U S. A.
Also enhancing ongoing integration task and ensuring overall growth opportunities.
The other operating income stand slightly above last year's level and contains two main components basically as already reported in the past quarters in past years, a R&D tax credits and B the recharge for.
Our infectious disease unit entity all all.
All in all this development resides in a plus 3% increase for this.
Operating other operating income.
With a total of 71 million euros, or adjusted EBITDA less well within our expectations.
Uh huh.
The net income amounted to 247 million euros and benefits really substantially from a very positive one off effect.
Non operating income, resulting from a fair value of our upgrade of our <unk> equity engagement do choose a recent IPO prior to our own IPO in the U S.
Moving to page number nine.
This slide depicts our strong base business development, leading to a 15% or so.
<unk> growth and this despite negative portfolio and unfavorable FX effects as already indicated before there.
Therefore, our base revenues adjusted for these two effects year on year, even grew by 22%.
Margin wise, we arrived within expectations, which was also supported by the successful realization of significant milestones as mentioned earlier.
The margin decrease versus last year is triggered by the same effects as just described for the revenues plus additional ramp up efforts and cost for our J pods and Redmond U S and this in context, obviously of preparing the.
Successful launch of this new site.
Moving onto page number 10.
Taking a view on the single Q3 results.
Illustrates the accelerated growth we have realized in this particular quarter and the 23% growth in revenues has been pushed by a strong milestone contribution but also by our growth areas such as just the just mentioned just took biologics that contributes an additional 11 seven.
And revenues in that quarter.
Gross margin comes in at good 27% and would exceed last year's 27, 9% if adjusted for the already before mentioned adverse FX effects.
<unk> expenses grew by.
11% SG&A expenses grew by 14% to support operational and financial growth and also the already.
Already considering some cost in context of the NASDAQ listing the major part of the budgeted costs. This listing will be accounted for in Q4 of them.
All in all the Ebitdas up 14% versus last year and would even increased by 19% if adjusted for the mentioned ethics of things.
Moving to page 11.
Looking at the two segments, both continued to grow and they both performed very well, reflecting a broad based business and abroad growth it would take in total.
Year to date, the execute revenues, including Intersegment revenues grew plus 17% coming from $367 million in the first nine months of 2020.
This is a further or this is further driven by an increasing demand for integrated offerings under our evil eye R&D.
Yes.
And also strong demand for the base business.
Nine months 2021, innovate revenues amounted to $102 million.
Excellent, 36% above last year due to the continued high demand for precision medicine.
Also reflected by the expanding existing as well as several new partnerships and also due to the realization of substantial milestones in Q3 2021.
Innovates total R&D amounted to $64 million, which is 21% above last year underlining, our continued investment and commitment into innovation projects and long term sustainability.
Moving to page 12.
Looking at the year on year revenue development. The increase is mainly driven by a very significant plus 26% organic growth of the base business reflected in the 99 zero million step of business last year and this is another evidence of our continuously high revenue quality coming from a healthy mix of.
Our sustainable repeat business with our long term partners and strong additional demand for our <unk> offering.
Most mostly due to the on average weaker U S dollar against Euro in the first nine months of 2020 revenues were negatively affected by a currency effect.
As in total minus $11 million and thus at constant 2020 FX rates sales.
Sales would have ended even better at approximately $442 million.
Page 13.
Summarizes it would takes very solid and substantial non P&L related.
Financial Kpis and here are the balance sheet is growing up 21% mirroring the ongoing dynamic growth also in our assets here.
Trade accounts receivables it could be kept on a very reasonable level, leading to improved DSO figure and DSO stands for days sales outstanding.
In addition to the equity ratio steps up to a very good 56% and also the net debt position, including our 2016.
<unk> is an excellent ratio factor of 0.8.
These factors together indicators indicate plenty of headroom and obviously also flexibility for further invest into <unk>.
Organic and strategic growth.
Please also bear in mind that the before mentioned Kpis before our NASDAQ listing from from early November 2021, which will lead to an even.
Lead to even better ratios.
And significantly increase our.
Our liquidity position as well as strengthening our.
Our balance sheet total.
Total liquidity decreased at the end of Q3 to $418 million, mainly driven by the.
The expected capex investments to support growth such as the J P and Redmond the ramp up of the second J put introduced where we are already starting to work on as well as a general expansion of our overall capacities across all sites.
And Furthermore, equity engagements into new and also into existing equity holdings require additional liquidity, where we keep investing.
And with this.
This complements the financial overview and I, therefore would like to hand back to Ghana. Thank you.
Thank you Angel.
With this maybe one short step back first before we go forward.
A quick reminder of the cornerstones of our strategy.
Because it is important that you should see that all pillars that power of our innovation hub are coming together.
Streaming nicely at this stage.
Our integrated evil eye R&D.
East going forward and deliver more projects than ever and with this we come to scale and scale effects in our business.
Precision medicine platforms, even pandemics, EBIT Pan Hunter, and especially our induced pluripotent stem cell platform.
Allowing us to go to the absolute frontier of precision medicine, and with this to improve probabilities of success that it has never been done before.
Our network of Biologics and our network of trade partners, which we summarized on the Evo excess east.
Is coming together very nicely and here pushing the go button.
August 21 was clearly a highlight this year and we also see that we are now going operational very nicely Panoptic strategy.
In all modalities coming quick to get up with Evo sales and EBIT teens in all other.
Modalities that we bring to bear on our outbound to cures allows us to put the best modality behind every target that we are putting together into corporations in the industry. So with this the claim of building the sharing economy within R&D is truly fully.
Substantiated.
How do we then put this forward into a business model that would be make the right business model for every partner to optimize speed and value for both partners.
With this we had the fee for service business and of course, our strategic long term goal is to build a co owned strategy, which results into co owned assets and ultimately into the largest royalty pud it has ever been built in the industry.
And if you go forward with.
Just want to illustrate how nicely these capabilities are coming together in leading to.
<unk> not only continued partnerships, but also new partnerships, we have people start to see the value of integration, but also the technological superiority that <unk> can bring to bear and it is the technological capability.
And it is the efficacy that we bring into projects that ultimately convince.
On Vince's every tightened up once they work with Evo tech to stay on <unk> platform with more than 90% probability.
It is great to highlight here just a few examples like for example engine and novel Nordisk to really start working with us in.
Service lines that we didnt worked with them before or to seed. It for example, our Korean partner is Dong is now, making dessert indigo with us, which basically shows you that we are translating three projects into the clinic with <unk> in a very short period of time, and that's something where we see that is.
Return rate of partners is truly substantiating, our land and expand strategy with all customers that we have built.
When we talk about tightness and when we talk about long term partners I want to highlight here out of <unk> innovative portfolio.
Our IPC platform and the.
Great progress of this platform in the last five years.
Because it's not only one target that came to the clinic here. It is a full portfolio of targets that will follow.
Right behind this in the field of neuro degeneration.
And let me highlight here.
This is a full induced pluripotent stem cell platform.
And here, we only talk about neuro degeneration as a carved out parts of that area.
Please be aware. This is just the beginning of our induced pluripotent stem cell and how we will create a network of partnerships and a network of indication areas in all modalities that can result out of this IPC platform that could go forward here into small molecule targets like we have.
Seen it with BMS, but it'll also be antibodies coming out of this platform that we will progress full but and of course, we are building a very large induced <unk> put some sensitive driven cell therapy platform forward, especially in the fields of metabolic diseases. Let me highlight here are cute beta project.
And we are expanding this at rapid speed.
The last.
What us and years into cell therapies in oncology.
And this will be something to watch out for in the year 2022, because we feel that what we're building here is not only we're feeding in drug discovery, but also world leading in cell therapy.
The next page shows you another precision medicine platform and platform of the highest degree of innovation power that's all up.
Protein degradation platform supported Pi evil panel mixing supported by Eva Pan Hunter, because if you bring this together protein degradation all of a sudden becomes a highly.
Dec productive effort, which you can also see here in a selective partnership with BMS, where we are working since 2018 on building here one of the largest industry efforts in protein degradation together with our partner.
These are just to highlight out of more than 10 massive scaled you'll take innovate transactions ongoing we have some of them early and others are already closer to market and when it comes to closer to market. Let me highlight on the next page.
We are very proud that our partner Bayer has shown.
What we expected to see in the phase II B.
That 80%, 80% will be not only a more selective but also.
More Ben.
Beneficial target when it comes to the side effect profiles.
Not only refractory chronic cough, which is the first indication that payer is targeting but also in many other indications, including neuropathic pain overactive bladder in endometriosis here multiple phase twos are ongoing and you will see results in the year 2022 and onwards. We are also in 2022, we expect a phase III start.
With <unk> III to target, which was derived at Evo tech translated into the clinic together with payer and now driven by payer into the market.
This is what we call very often that the top of the iceberg.
Our co owned pipeline as shown in the next page is only highlighting a few of the multiple days.
Data points that you will see coming out of this co on pipeline.
We are very confident that the strategy.
We've become not only more visible and brought up but also we'd show you message medical impact in many of the indications that we are following.
Again, let me highlight here the power of <unk> is the best in class molecule in multiple indications.
Highlights here are koziol Therapeutics alliance in oncology with the target that came from <unk> was progress forward.
And we don't want to.
<unk>.
Overemphasize the strategy here, but we want to really show you on the left side of this page that there are multiple data points. We are always our partner is in charge of financing these projects into their respective markets are going forward in voluntary Nice example here is.
That Eva take alone would have never found to excess to the Chinese market. When it comes to an insomnia truck. So that's why it is great to see pure upside from our partner <unk> pharma driving this into market, which otherwise we would never have access and now.
We feel that singing families on a good path to enter here the insomnia market in China.
'twenty three and with this initial small royalties will also come to even take out of this project.
I think you all understand the strategy and you also are all on board when it comes to accelerating the strategy as you see on the next.
Page.
Into other modalities that we have still only a few years ago, because my T. Modality is something which will drive medicine full but into the next decade and.
And we couldnt be more happy about our colleagues in Seattle than we are because what we have seen out of our initial partnership with just eat will take biologics that'd be scaled now into commercial manufacturing scale.
Is something where we make an impact a huge impact and this will be started with the first product that will come out of the retina facility in 2022, where we are at this stage in trial runs for commercial products will be at this stage I'll also building a huge pipeline of biotech corporations.
That of course, then we will take a while until they are going to be commercial but as you know the product in biologics and in cell therapies is the process and with this we are co owning here not only product in the future, but also processes in the future, which would make our concept even more.
The key with our partners.
Me highlight also here this the beginning of our <unk> chip part, which is ongoing and with this we are also very happy with the progress that we see in Toulouse.
Expanding our strategy to co own targets into co owned companies and academic pitches is something that is ongoing and here. We are of course very happy with the active capital markets at this stage in the private world because that allows us to leverage <unk>.
Forms into much of the companies, but we are also very convinced about our long term co owning strategy to take.
The biggest innovations that are coming from basic science in academia directly onto the <unk> platform. So I want to really highlight our breeches efforts that are ongoing yes. We are aware. This is a long term strategy, but it will take is thinking long term and with this co owning the academic excellence of today.
Into the future is a very very rewarding way as you will see.
When it comes to rewarding beauty want to highlight our COO on companies not only here at NCR, but many others are also making good progress here in the private space I want to highlight for example, breakpoint therapeutics or I want to highlight Neff Tara I want to highlight <unk>. These are all companies, where you will hear a lot about them in the future because they are very.
Oh fingerling for first in class technologies and first in class targets that we are co owning and building on our platforms.
When it comes to.
He will take as a company you should see that we are building a long term sustainable company and sustainability as you see on the next page was something that we highlighted about a year ago.
Ben.
And we can also related to people when flicker Brown interest of company and behave ESG also.
An officer, so to say, we did not want to make a lip service and new dropped we wanted to make ESG is part of our strategy.
And what you see on this page is just a few highlights that.
That we are translating here.
Company believes company culture into actions and it is great to see that our 4100 employees.
Fully onboard with this because we are creating a place to work which is more.
And when I say more it's more sustainability. It is more caring about the world then only making novel drugs, which is of course, our core purpose, but we can also do a lot when it comes to energy we can do a lot when it comes to quality of how we.
We leverage our company here into educating not only within the company, but also our supply chain partners. For example, while our families that are working here together with our colleagues at work.
So putting ESP in the center of our company is a good idea because it makes us stronger in the long run.
And with this we are strong or so for the short run because we can confirm our outlook for 'twenty two and already to date. If you have very strong visibility of his great water.
In 2022, when it comes to our topline.
And with this I really want to highlight one more time.
It is great that you follow us on the next page we want to also highlight here, but this time, we have to inform you that our capital markets day has been shifted to the second of March because we were advised that we shouldnt do it so close to a Nasdaq.
IPO because everything that is not in the F. One would have potentially been here a bit conflictual and we don't want a risked that so please mark your calendars for the second of March we will have a great R&D day together with you that we will show you the power of our platforms. When it comes to integration of technology and may come to precision.
Medicine in building a co on pipeline.
With this let me. Thank you very much for following <unk> and we are open for questions and let me again highlight here in sync Craig in court for being on the line as well for your questions.
Thank you we will now begin our question and answer session. If you have a question for speakers. Please stay right one on your telephone keypad now to enter the queue.
What's your name has been announced you can ask the question.
Final question is it looks like as you attempt to speak you can see key accounts with your question.
If you are using speaker equipment today.
Making a selection.
Our first question is from Joseph Hedden of ex Securities. Please go ahead.
Good afternoon, thanks for taking the questions first one on guidance.
Things you reported.
Revenues of 400 can say $1 million.
To get to the top end of your revenue guidance is about $140 million away now.
In your books 116, Q3 generally being as Q4 is quite strong <unk> is it fair to say the guidance on the topline is now pretty conservative.
Is there some kind of affection.
Missing.
Maybe I'll hand, this over to <unk>, because he used a conservative guy.
Thank you very much better.
And welcome on the call and indeed currently from what we see we are clearly expecting our revenue guidance to be on the upper upper part of our range.
Okay.
But please bear in mind since we are fully invested at this stage into growth and with this I think the only question for US is how to translate strong topline into bottom line and here I think for US we see that investing into growth for the long run is the right thing to do.
Okay.
Okay. That's great. Thanks, and then just have one more on the on the recent payments.
Progress with the BMS Neogen degeneration deal.
Additional program designations could you, perhaps explain a little bit more about what that means.
It's not the same kind of progress.
The recent <unk>.
These projects go into the clinic how many.
Any details you can give would be great. Thanks.
So maybe I hand over this question to court to elaborate a bit how and might be target alliance on our IPC platform really works and how these payments come together.
If you are.
Take if you can take that question quick.
Sure Good morning, good afternoon, everybody.
So.
The new alliance with BMS started about five years ago.
Billy immensely proud that from essentially.
<unk>.
Zero start almost essentially from a <unk>.
Initial phenotypic screening approach behalf.
Already introduced the first molecule into the clinic and essentially less in five years' time, which is.
I would say it was a very ambitious timeline and behalf.
Actually surpassed our goals in that regard and.
In parallel as you could see from the <unk>.
Buena presented.
Aligns has consistently growing in terms of number of programs that we have added to the portfolio and the most recent.
<unk> of milestone achievements, it's essentially.
Just elucidate on this on the fact that.
A number of programs now in still at preclinical stages hash.
Two key value inflection points.
Essentially you'd pms.
Not only obtain on a target but related.
Small molecules and <unk>.
Here.
These programs are going to be.
I would say.
<unk>.
A couple of years behind the.
The initial line deep falling but.
It's.
We are immensely proud of that.
The the number of programs, but also the.
The stage of the program to steadily advancing and this is just another confirmation of that.
Unfortunately, I won't be able to disclose neither targets no exact stage programs at this point in time.
Thank you so much I hope this answer okay. Thanks, Jason.
Let's see.
Go to next question please.
Thank you. Our next question is from Ram <unk> from H C. Wainwright. Please go ahead.
Hi, This is <unk> dialing in for <unk>, Thanks for taking my questions.
To follow up on the partnership I want to highlight previously.
What neurological disorders, although likely to make the most sense to target with $86 83, and what level of risk mitigation with the crusher the simultaneous development in multiple neurological businesses to watch.
Second with respect to your lap.
You're going to see Birmingham.
So mitra.
The only targeting growing them in PST.
Inscription factor, the peaking of the spot market.
No.
Right right doesn't really.
So difficult to project, what you're quite right just given the territory.
I'm very sorry. The line that you are using as a telephone line is for us very difficult to understand.
So I didn't get the first two questions at all what did you get anything.
I think I got the first question regarding the most.
Attractive indications for EBIT.
80 683.
That's about it.
Yeah Okay.
Can I just make a suggestion that you either send in your questions fast and we do this then then directly via email.
If we have to during the call, but the line is really not good.
Sorry about that.
So I could I could try to answer the first question, maybe you could do that and the line has dropped so he will dial in again, where he will send it in the yes. Okay.
So very briefly regarding the <unk>.
Last question, if I understood. The question correctly, it's about what are the most attractive neurodegenerative indications for EBIT 80 683.
Recently, a molecule recently opted in on it.
Okay.
Central R&D filing and.
Here, we are talking about.
Our mechanism and that is targeting the unfolded protein response pathways.
Which is.
I would say a highly attractive.
And as much as the.
So Paul for multiple new degenerative disorders.
The current plan as far as I can disclose it is that we will move forward with BMS.
On a.
More specific indication.
So initially there will be of.
Of course phase one studies, but then we intend to move forward most likely into more specific indications such as ALS in particular is of interest of course, but.
I would say more generally.
The mechanism has tremendous promise in many other neuro degenerative indications, including Alzheimer's.
It's really.
Pretty broad.
Thank you so much.
With this maybe we take the next question and wait for ROM email.
Thank you. Our next question is from Christian and that of Warburg Research. Please go ahead.
Hello, everyone. Good afternoon.
I have three questions at the moment so source could.
Could you give us a little bit more detail about the extent of your supply chain issues you mentioned in.
In the beginning of your talk.
Second I noticed that while you talked about all the modalities you're offering.
<unk> therapy is absent from the presentation and inform you mentioned, you're so what's what's what's the point to you soon.
Is there anything you've.
Change in the past that you want to tell us.
At this moment about this all.
What's going on here.
And the third one would be so.
You reported some considerable achievements with the BMS partnership off based on the on your IPC platform.
But to what kind of maybe other partnerships other companies, we can expect in the future too.
I'll broaden your customer base in this area thanks very much.
Let me take the second question first because there is of course fleet.
Activity behind <unk> antisense.
Projects that were working on a partnership here with <unk> is ongoing our platform expansion together with <unk> is ongoing so sorry, if I didn't mention it enough, but there is nothing that should hold us back from also being fully committed to this modality, because it's highly innovative and it might be the right modality for certain targets in certain.
<unk> and that's I think all the point, we want to make.
Every model every target deserve the best modality yeah.
And that's what you can find on our unbiased way of looking at.
The optionality between modalities for targets, but theres nothing wrong on.
Well I should have probably stressed at even more but please don't get me wrong.
When it comes to supply chain issues, let me stay here on that on a general comment.
And then hand over to Endo briefly.
I think we see a world where.
Coming all out of the pandemic many people have stockpiled many things.
And of course, some people have stockpiled for some.
Areas of activities, a bit too much and too little and that's I think we are navigating through this is something that we have done extremely well so far so I would not be able to mention necessary massive delays or anything with our partners that's not happening at Evo.
So really big Thank you to the whole team who is doing this within the company extremely diligent extremely well.
The second point I want to mention is of course with a huge exposure into the U K.
We are adopting here to a country, which opted to go out of the EU, which doesn't make it always easier for us, but we are adopting extremely well.
But these are of course, all process changes that we that we are seeing now and they all don't come for free.
That's also something that we see yeah, and nevertheless, the value that we generate by doing this is of course significantly higher than the cost that we have to incur here on top maybe I know if you have anything to add there not too much to add I mean, it's really a mix of many pods and the one clearly.
The last example of that when I alluded to is the Brexit part, which is not a huge impact but it makes life a little bit more complicated just to give you. An example, if you ship things rather fast when a high frequency like we do with so protects and then all of sudden you take instead of two days, where you have perfect dry icing packaging it takes four or five years.
Six days and it is not as reliable then you have to rethink your logistical chain and these things take extra efforts than we have COVID-19 and COVID-19 directly does not do a lot to us, but obviously some basic materials like for instance, just plastics for packaging assured and you really have to make sure that you have in time sufficient supply of these mature so it really <unk>.
Hedging these orders looking far ahead, but also novel not overstocking.
The balance that we have to go in so its always little things that make it in total a little bit more.
Efforts requesting two months ago.
And coming to your third question I will then hand over to quit but to introduce his answer I had the pleasure of sitting yesterday together with our group here lead by Sandra Lupit, who used to basically platform group.
The whole Ips C area.
Once you go through an hour of understanding what the technology does what full optimization does.
You can see why we very often see this is just the beginning of what this technology platform will do and that's why one large area that we have highlighted so far is clearly just one out of many that will come in with this I hand over to Cort, maybe to elaborate a bit on that.
Yes.
Yeah.
Generally our IPC platform continues to grow consistently and I think the most recent evidence in I'm not quite sure when exactly it was but I think about the three or four weeks ago.
It's just another expansion with the BMS into.
Another area.
So essentially it's a system that we have built.
Collecting.
Disease spending on patient disease relevant.
As a system for drug screening purposes.
And here, we've been very fortunate that our partner BMS opted in on many of these assays as we built them, but nevertheless, we are consistently also in discussions with all the partners on the IPC platform and continue to do so.
We are fairly confident that we will sign.
Additional contracts here in the future when exactly they will come I don't want to comment on yet, but it would be.
We are pretty confident.
And maybe Christian to give you a bit more color here.
Typically partners.
Have to be long term debt.
Dedicated partners in certain disease areas, otherwise it doesn't make sense for us. So you should not expect here small companies partnering with us on a PC platforms EPS.
B companies fully dedicated to certain disease areas. So I think part of the category number one here is the traditional twin top 20 pharma players that we're working with and the second category, which is increasingly important to us and we are working also with for example, the Huntington disease Foundation.
Very very closely on many technological areas are mission driven foundations, who we give access for their mission driven indications also on.
Our IPC platform. If this makes sense for them because there is a long term mission is a clear technological fit and everything that these mission driven foundations neat they can get with EBIT tech platforms.
So that's also a business area, which is growing extremely nicely.
And we also feel a.
Phil That's our mission is Eva <unk> to an EBIT partners.
In finding new drugs is really as efficient as it can be so that's that's a bit of color. We can give you here and don't forget our COO Beta project is also.
<unk> up and running and progressing very nicely and the same is true as I already said for cell therapy and oncology.
Thanks, when you are talking about growth in the IPC platform do you mean.
Amount of cell lines, or what kind of kpis to U S.
As a benchmark to you.
So with 300 fully cultivated fully active cell lines, the vision of creating patients in a dish.
For example is accelerating as we speak so we feel that we hear are coming to scale and with this also coming to levels of this platform that it will be just making a huge world leading difference that's of course, one K P. I. The second is how many essays.
Fully robust up and running that's another kpis because an essay is basically guiding us into a field of biology that we can then accelerate and translate into indications. So here we are way beyond the 15.
Now and that's really world, leading I want to stress this.
And the third indication of course, it's been commercial input and output and I don't know many.
Investments that we have made which we started in 2012.
Where we are getting close I would say to earning our money back already and I only look at the BMS partnership would be probably a way beyond that already but again this investment will be multiplying many many times into the future and has already multiplied if.
If I'm correct here when it comes to the value that we have generated.
Thanks, very much very helpful.
Pleasure.
Thank you. Our next question is from Victoria English of ethanol publishing. Please go ahead.
Yes, that's right.
You may return to the royalty pools.
Recall from our last.
Telephone conversation three months ago.
Pool is owned.
Hi, Jack.
Correct.
What would your intention be once the pool gets substantially larger for us.
Proceed.
Small companies for example.
Yes. Thank you so much for the question.
And welcome again underlying hope to see you again in person very soon.
Let me say that first secondly.
Having the optionality with the royalty.
For us be I think really tangible from the year 'twenty four 'twenty five onwards, so it's a bit early to make it too many statements before we adapt but of course.
Conceptually, yes, we have started to basically put the lowest cost of capital to work wherever we can what do I mean with this royalties for us will be basically highly profitable at low cost of capital and if we can reinvest it into companies that we are building.
That's of course, a fantastic use of capital.
Our second use of capital would be to say some of these royalties will be capitalized because we don't have immediate cash need.
Which again would be a great option to have for example, also to return this to our shareholders.
In partial dividends or impartial returns, but that's just one optionality in the longer run and the third idea of this royalty pool is to grow it and continue to full speed invest for example into massive scaling of our precision medicine platforms, because I don't think that we are at the end.
For example, molecular patient databases that have to be mind I think we're at the beginning of that and so I think for the next decade, we have a very good idea of what to do with this in building a highly innovative company and.
And that's why I see.
We have started to think about it but we're not there yet I think that's also CFO mentioned, okay. Thank you very much.
Asia.
Thank you just as a reminder, if you wish to ask a question. Please press star one on your telephone keypad. Our next question is from Chris <unk> of <unk> Partners. Please go ahead.
Hi, guys.
I kind of kind of macro question here a little bit.
Okay.
Yes.
The whole kind of Covid vaccine.
Sort of.
As far as I can work out to turbo charge to the <unk>.
Cafe based.
<unk>.
Yes.
Therapies in a way that no because it was critical it was call it sluggish for a long time, but it seems like given the sort of volumes of people receiving these claims.
Vaccines and we'll have you are you are you seeing that kind of increase in activity in those in those therapies and in the interest in that.
And so those therapies and on the back of that what are you sure.
<unk> structure in terms of expanding into that space.
Yep.
Maybe cort I can't under over the question to you.
Yes.
First of all I think Europe separations of course completely right.
So.
Nucleic acid based therapies.
Uh huh.
I have come to front and center attention of pharmaceutical industry and here in particular.
Messenger RNA based therapies.
It's the messenger on based vaccines commentary.
<unk>.
The most successful approaches here.
Product currently.
Nevertheless, I would say so first of all I think.
We have to mention that.
It would take to not pursue Michigan, Mr. Arnie based therapies.
<unk>.
Historically, we have not been in the vaccine business vaccination business and.
Messenger RNA based therapies.
For therapeutic intervention have not.
Successful at all so far.
It's still.
There are many approaches that have been tried in many areas, but so far they have not been successful.
So this is why that's one of the areas.
We have not invested too much into it but rather.
I'm wondering and focus more on.
Proven drug modalities, where it's clear that they are.
It is going to be a benefit ultimately.
With the with the advent of the National based vaccines. However.
It is something that we are evaluating and watching very closely if there are opportunities for <unk> to move into that area, but we have not done any any more okay. That's all for today.
Okay. Thanks, there is one more question, which just came in.
Email, which will take.
Which leads me to repeat the question because that's what I intended to do its a question basically on two parts. The first of all is about.
<unk> materials and cost for raw materials, developing so basically about inflation and the second part is the same direction about labor cost, increasing and going up for a question Mark.
We clearly obviously have monitoring both and we do recognize that increase of cost in the base materials that'd be ordering but so far.
Still in the field that is kind of moderate in which we can handle as I mentioned before already that we do at certain parts of our autos and auto very early with early stockpiling. So already today covering a lot of the needs for 2022.
But obviously, we also keep closely monitoring this field as.
Is it can have a significant significant impact as it continues to grow beyond what we're currently seeing in the markets and that's going to be on a regular basis at.
At the same is true also for recruitment of employees of new employees and also maintaining and retaining the existing ones, where we also clearly recognize that salaries are increasing.
There's a certain level of inflation, which we have to consider also in the.
Future cost development going forward to.
To be closely monitored toward is clearly on the desk.
On management awareness.
Thank you so much.
Next question. Please if there is anything coming in from D.
Are there are no further questions on the audio lines at the moment.
Great.
If there are no further questions. Let me. Please invite you to send in your questions whenever you want to forecast and his team here really doing the best of aligning your questions with what we can answer and how it should be paid back.
One thing the other thing is let me. Thank you so much for.
Following Evo tech throughout this year.
We guarantee that the year's not over yet in that you will hear a significantly more from us still in this last few months, but Christmas is coming for all of US and this will be our last conference call on quarterly results before Christmas So.
On that note, let me preload to the year and on this occasion as well.
And lastly, let me already remind you again for our capital markets day on the second of March which will then be the first conference call that we hold.
In the new year, because that's before our.
Full year disclose that disclosure that we can make them.
Next year thank.
Thank you so much have a great today and I wish you all the best.
Ladies and gentlemen, thank you for your attendance. This call has been concluded you may now disconnect.
[music].
Okay.