Q2 2025 Evotec SE Earnings Call

Matilde (Quarters Call Operator): Ladies and gentlemen, welcome to the Evotec SE Half Year Report 2025 Conference Call. I am Matilde, the Quarters Call Operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Volker Braun, Head of IR and ESG. Please go ahead.

Speaker #1: The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone.

Speaker #1: For operator assistance, please press * and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Volker Braun, Head of IR and ESG.

Volker Braun: At this time, it is my pleasure to hand over to Volker Braun, head of IR and ESG. Please go ahead. Thank you, Matilde. Good morning. Good afternoon to everyone in the call. Thank you for joining us today. Today, we will cover our H1 2025 results, and we will discuss the progress we have made in the execution of our strategy as well as the key operational and external developments. We will, of course, also provide an update on the evolution of the Just Evotec Biologics business, of which the plant Sandoz is part of. However, because of the running process, we will not dwell in the details as such. We appreciate your understanding. Before we start, the usual 30 seconds on housekeeping items. On page two, we share the cautionary language with you.

Speaker #1: Please go ahead.

Speaker #2: Thank you, Matilde, and good morning, good afternoon to everyone in the call. Thank you for joining us today. Today, we will cover our first half, 2025 results, and we will discuss the progress we have made in the execution of our strategy, as well as the key operational and external developments.

Paul Hitchin: Thank you, Matilde, and good morning, good afternoon to everyone in the call. Thank you for joining us today. Today, we will cover our first half 2025 results, and we will discuss the progress we have made in the execution of our strategy, as well as the key operational and external developments. We will, of course, also provide an update on the evolution of the Just - Evotec Biologics business, of which the planned Sandoz deal is part of. However, because of the running process, we will not dwell in the details as such. We appreciate your understanding. Before we start, the usual 30 seconds on housekeeping items. On page two, we share the questionnaire language with you. Some statements will be future-looking based on information available today, and they might be subject to change in the future. Now, let me hand over to the CEO of Evotec, Dr.

Speaker #2: We will, of course, also provide an update on the evolution of the Just Evotec by Logix business, of which the plans are no steal, is part of.

Speaker #2: However, because of the running process, we will not dwell in the details as such. We appreciate your understanding. Before we start, the usual 30 seconds on housekeeping items.

Speaker #2: On page two, we share the cautionary language with you. Some statements will be future-looking based on information available today, and they might be subject to change in the future.

Christian Wojczewski: Some statements will be future-looking based on information available today, they might be subject to change in future. Now, let me hand over to the CEO of Evotec, Dr. Christian Wojczewski. Christian, please. Good afternoon and welcome to our H1 call. In April this year, we unveiled a new strategy, a strategy that sharpens our focus on pioneering drug discovery and development, with a plan to center our business around its core technology and scientific strength, to cultivate operational excellence, and to place us on the path to sustainable, profitable growth. As we reflect on H1 2025, we can say with confidence that we've made meaningful progress on our journey. Our transformation efforts are on track and delivering tangible gains. Just – Evotec Biologics remains on its strong growth path, driven by our unrelenting focus on technology leadership in biologics.

Speaker #2: But now, let me hand over to the CEO of Evotec, Dr. Christian Wojczewski. Christian, please.

Paul Hitchin: Christian Wojczewski. Christian, please.

Speaker #3: Good afternoon and welcome to our H1 call. In April this year, we unveiled a new strategy—a strategy that sharpens our focus on pioneering drug discovery and development.

Cord Dohrmann: Good afternoon and welcome to our H1 call. In April 2024, we unveiled a new strategy, a strategy that sharpens our focus on pioneering drug discovery and development, with a plan to center our business around its core technology and scientific strength, to cultivate operational excellence, and to place us on the path to sustainable, profitable growth. As we reflect on the first half of 2025, we can say with confidence that we have made meaningful progress on our journey. Our transformation efforts are on track and delivering tangible gains. Just - Evotec Biologics remains on its strong growth path, driven by our unrelenting focus on technology leadership in biologics. In other areas, we are actively managing continuing market challenges. We will talk about all of this today.

Speaker #3: With a plan to center our business around its core technology and scientific strength, to cultivate operational excellence, and to place us on the path to sustainable, profitable growth.

Speaker #3: As we reflect on the first half of 2025, we can say with confidence that we've made meaningful progress on our journey. Our transformation efforts are on track, and delivering tangible gains.

Speaker #3: Just Evotec by Logix remains on its strong growth path, driven by our unrelenting focus on technology leadership in biologics. In other areas, we're actively managing continuing market challenges.

Operator: In other areas, we're actively managing continuing market challenges. We'll talk about all of this today. To be in a position to sustainably shape the future, we are following a structured and disciplined process, and we're delivering on it. We took immediate action in 2024 when resetting priorities was essential and were ahead of plan in achieving our cost-saving targets. Paul will elaborate on this later. In Q3 2024, we announced the launch of an in-depth strategic review, which we completed according to plan. The retooling of Evotec is starting to materialize. We're strengthening our competitive position in the field of drug discovery by focused investments into our technology platforms. A great example is the expansion of our Molecular Patient Database. We're further evolving our business model at Just – Evotec Biologics. Next on our agenda, we're now aligning the organization with our strategy.

Speaker #3: We'll talk about all of this today. To be in a position to sustainably shape the future, we are following a structured and disciplined process, and we're delivering on it.

Cord Dohrmann: To be in a position to sustainably shape the future, we are following a structured and disciplined process, and we are delivering on it. We took immediate action in 2024 when resetting priorities was essential, and we are ahead of plan in achieving our cost-saving targets. Paul Hitchin will elaborate on this later. In Q3 2024, we announced the launch of an in-depth strategic review, which we completed according to plan. The retooling of Evotec SE is starting to materialize. We are strengthening our competitive position in the field of drug discovery by focused investments into our technology platforms. A great example is the expansion of our molecular patient database. We are further evolving our business model at Just - Evotec Biologics. Next on our agenda, we are now aligning the organization with our strategy.

Speaker #3: We took immediate action in 2024 when resetting priorities was essential, and we're ahead of plan in achieving our cost-saving targets. Paul will elaborate on this later.

Speaker #3: In Q3 2024, we announced the launch of an in-depth strategic review, which we completed according to plan. A retooling of Evotec is starting to materialize.

Speaker #3: We're strengthening our competitive position in the field of drug discovery, by focused investments into our technology platforms. A great example is the expansion of our molecular patient database.

Speaker #3: And we're further evolving our business model at Just Evotec by Logix. Next on our agenda, we're now aligning the organization with our strategy. This work is currently underway, and we expect it to be completed before end of the year.

Operator: This work is currently underway, and we expect it to be completed before end of the year, ensuring we are all well-positioned to compete and perform even more effectively in the years ahead. A core element of our new strategy is to sharpen our offer and reduce complexity. Furthermore, we're upgrading our commercial model, providing standalone services, integrated drug discovery, and strategic partnerships. The business segmentation and terminology of our reporting should reflect our new setup. Consequently, going forward, we will have two core business segments reported as Discovery and Preclinical Development, D&PD, and Just – Evotec Biologics, JEB. D&PD covers our discovery and development activities for small molecules and new modalities, from target identification to IND. Just – Evotec Biologics is covering our large molecules business. Our vision unites both business segments. We are unleashing innovation to enable our partners to develop life-changing medicines.

Cord Dohrmann: This work is currently underway, and we expect it to be completed before the end of the year, ensuring we are all well positioned to compete and perform even more effectively in the years ahead. A core element of our new strategy is to sharpen our offer and reduce complexity. Furthermore, we are upgrading our commercial model, providing standalone services, integrated drug discovery, and strategic partnerships. The business segmentation and terminology of our reporting should reflect our new setup. Consequently, going forward, we will have two core business segments reported as Discovery and Preclinical Development (DNPD), and Just - Evotec Biologics (DEPB). DNPD covers our discovery and development activities for small molecules and new modalities from target identification to INDiGO. Just - Evotec Biologics is covering our large molecules business. Our vision unites both business segments. We are unleashing innovation to enable our partners to develop life-changing medicines.

Speaker #3: Ensuring we are all well-positioned to compete and perform even more effectively in the years ahead. A core element of our new strategy is to sharpen our offer and reduce complexity.

Speaker #3: Furthermore, we're upgrading our commercial model, providing standalone services, integrated drug discovery, and strategic partnerships. The business segmentation and terminology of our reporting should reflect our new setup.

Speaker #3: Consequently, going forward, we will have two core business segments: reported as discovery and preclinical development, DNPD, and Just Evotec by Logix, JEP. DNPD covers our discovery and development activities for small molecules, and new modalities from target identification to R&D.

Speaker #3: Just Evotec by Logix is covering our large molecules business. Our vision unites both business segments. We are unleashing innovation to enable our partners to develop life-changing medicines.

Speaker #3: Pioneering drug discovery and development for us means leveraging cutting-edge technology, disruptive science, and AI-driven innovation to drastically accelerate the journey from concept to cure.

Cord Dohrmann: Pioneering drug discovery and development for us means leveraging cutting-edge technology, disruptive science, and AI-driven innovation to drastically accelerate the journey from concept to cure. Let me now share with you some observations on the developments during the first six months of the year. H1 has not been without its challenges. We saw a revenue decline in our Discovery and Preclinical Development segment of 11%. A large part of that is related to a temporary effect in our BMS collaboration. The remainder is driven by continued softness in the early drug discovery market. In the first half, we have seen higher negative change orders compared to the previous period. Most of these change orders are related to scientific reasons, and the impact can be volatile. At the start of the second half this year, we are back to normalized levels of change orders.

Operator: Pioneering drug discovery and development for us means leveraging cutting-edge technology, disruptive science, and AI-driven innovation to drastically accelerate the journey from concept to cure. Let me now share with you some observations on the developments during H1 of the year. H1 has not been without its challenges. We saw a revenue decline in our Discovery & Preclinical Development segment of 11%. A large part of that is related to a temporary effect in our BMS collaboration. The remainder is driven by continued softness in the early drug discovery market. In H1, we've seen higher negative change orders compared to the previous period. Most of these change orders are related to scientific reasons, and the impact can be volatile. In the start of H2 this year, we are back to normalized levels of change orders.

Speaker #3: Let me now share with you some observations on the developments during the first six months of the year. H1 has not been without its challenges.

Speaker #3: We saw a revenue decline in our discovery and preclinical development segment, of 11%. A large part of that is related to a temporary effect in our BMS collaboration.

Speaker #3: The remainder is driven by continued softness in the early drug discovery market. In the first half, we've seen higher negative change orders compared to the previous period, most of these change orders are related to scientific reasons, and the impact can be volatile.

Speaker #3: In the start of the second half this year, we are back to normalized levels of change orders. Furthermore, since the beginning of Q2, we are seeing a steady increase in number and value of proposals going out to customers.

Operator: Furthermore, since beginning of Q2, we are seeing a steady increase in number and value of proposals going out to customers. We continue to progress well in both of our collaborations with BMS in urology and oncology. In Q2, we further expanded the scope of our Molecular Patient Database by joining the NURTuRE Consortium. I will share the strategic rationale with you later in the call. We initiated the rollout of a new operating model to align our organization with our strategy, to simplify our segment structure, reduce management complexity and layers, most importantly, to increase accountability for results in all parts of the organization. This isn't just a reorganization. It's a reorientation towards both operational and science excellence. Just – Evotec Biologics continues to outperform. With 16% revenue growth year-over-year, JEB is not only enjoying high demand and delivering strong results above our expectations.

Cord Dohrmann: Furthermore, since the beginning of Q2, we are seeing a steady increase in the number and value of proposals going out to customers. We continue to progress well in both of our collaborations with BMS in urology and oncology. In Q2, we further expanded the scope of our molecular patient database by joining the Nurture Consortium. I will share the strategic rationale with you later in the call. We have initiated the rollout of a new operating model to align our organization with our strategy, to simplify our segment structure, reduce management complexity and layers, and most importantly, to increase accountability for results in all parts of the organization. This isn't just a reorganization; it's a reorientation towards both operational and science excellence. Just - Evotec Biologics continues to outperform.

Speaker #3: We continue to progress well, in both of our collaborations with BMS, in urology and oncology. In Q2, we further expanded the scope of our molecular patient database by joining the nurture consortium.

Speaker #3: I will share the strategic rationale with you later in the call. We've initiated the rollout of a new operating model to align our organization with our strategy, simplify our segment structure, reduce management complexity and layers, and, most importantly, increase accountability for results in all parts of the organization.

Speaker #3: This isn't just a reorganization, it's a reorientation towards both operational and science excellence. Just Evotec by Logix continues to outperform. With 16% revenue growth year over year, JEP is not only enjoying high demand, and delivering strong results, above our expectations, it is validating our vision.

Cord Dohrmann: With 16% revenue growth year over year, Just - Evotec Biologics is not only enjoying high demand and delivering strong results above our expectations, it is validating our vision, a vision where we shape a new segment in the biologics manufacturing market with differentiated and scalable technology. We remain bullish about the prospects of our Just - Evotec Biologics business. At the end of July, we announced the planned sale of our Toulouse site to Sandoz. This is a natural progression in the JPOT lifecycle, and it marks a major milestone in our strategy to lean into Just - Evotec Biologics' capabilities as a scalable technology provider with an asset-light model. Now, let me spend a few words on the relevant market environment we are operating in. We are navigating a complex funding landscape in biotech. While venture capital inflows are stabilizing at pre-pandemic levels, the distribution remains uneven.

Operator: It is validating our vision, a vision where we shape a new segment in the biologics manufacturing market with differentiated and scalable technology. We remain bullish about the prospects of our JEB business. At the end of July, we announced the planned sale of our Toulouse site to Sandoz. This is a natural progression in the J.POD lifecycle. It marks a major milestone in our strategy to lean into JEB's capabilities as a scalable technology provider with an asset-lighter model. Now, let me spend a few words on the relevant market environment we are operating in. We're navigating a complex funding landscape in biotech. While venture capital inflows are stabilizing at pre-pandemic levels, the distribution remains uneven. Early-stage investments, such as seed and series A rounds, which typically support companies with projects in discovery or preclinical phases, continue to lag behind later-stage funding.

Speaker #3: A vision where we shape a new segment in the biologics manufacturing market, with differentiated and scalable technology. We remain bullish about the prospects of our JEP business.

Speaker #3: At the end of July, we announced the planned sale of our Toulouse site to Sandoz, this is a natural progression, in the JPOT lifecycle.

Speaker #3: And it marks a major milestone in our strategy to lean into JEP's capabilities as a scalable technology provider with an asset lighter model. Now, let me spend a few words on the relevant market environment we are operating in.

Speaker #3: We're navigating a complex funding landscape in biotech. While venture capital inflows are stabilizing, at pre-pandemic levels, the distribution remains uneven. Early-stage investments such as seed and serious A rounds, which typically support companies with projects in discovery or preclinical stages, continue to lag behind later-stage funding.

Cord Dohrmann: Early-stage investments, such as seed and series A rounds, which typically support companies with projects in discovery or preclinical phases, continue to lag behind later-stage funding. The funding equilibrium between discovery and preclinical on the one side and clinical-stage companies on the other has yet to be achieved. We continue to observe a cautious spending behavior in earlier-stage R&D. In contrast, clinical programs, many of which originated during the well-funded pandemic years, benefit from more robust financial backing and spending. Our customer base in biotech is mostly focused on discovery and preclinical research. Funding for this sector is still behind normal pre-pandemic levels, and spending behavior, therefore, is more careful. Signs of a modest recovery in funding are emerging. Over the coming quarters, we expect a more normalized distribution of funding and project flow to take shape.

Speaker #3: The funding equilibrium between discovery and preclinical on the one side and clinical stage companies on the other has yet to be achieved. We continue to observe a cautious spending behavior, in earlier stage R&D.

Operator: The funding equilibrium between discovery and preclinical on the one side and clinical-stage companies on the other has yet to be achieved. We continue to observe a cautious spending behavior in earlier-stage R&D. In contrast, clinical programs, many of which originated during the well-funded pandemic years, benefit from more robust financial backing and spending. Our customer base in biotech is mostly focused on discovery and preclinical research. Funding for this sector is still behind normal pre-pandemic levels, and spending behavior, therefore, is more careful. Signs of a modest recovery in funding are emerging. Over the coming quarters, we expect a more normalized distribution of funding and project flow to take shape. Let me now hand over to Paul Hitchin, our CFO, to guide you through the H1 financials. Paul, please. Thank you, Christian, and a warm welcome from my side.

Speaker #3: In contrast, clinical programs many of which originated during the well-funded pandemic years, benefit from more robust financial backing and spending. Our customer base in biotech is mostly focused on discovery and preclinical research, funding for this sector is still behind normal pre-pandemic levels and spending behavior, therefore, is more careful.

Speaker #3: Signs of a modest recovery in funding are emerging. Over the coming quarters, we expect a more normalized distribution of funding and project flow to take shape.

Speaker #3: Let me now hand over to Paul Hitchin, our CFO, to guide you through the H1 financials. Paul, please.

Cord Dohrmann: Let me now hand over to Paul Hitchin, our CFO, to guide you through the H1 financials. Paul, please.

Speaker #4: Thank you, Christian, and a warm welcome from my side. Now, let me guide you through the first half results in more detail. Our first half, 2025 group revenues reached $371 million euros, a 5% decrease versus the first half of 2024.

Paul Hitchin: Thank you, Christian, and a warm welcome from my side. Now, let me guide you through the first half results in more detail. Our first half 2025 group revenues reached €371 million, a 5% decrease versus the first half of 2024, which has been impacted by two counterbalancing effects. Firstly, our DNPD revenues declined by 11% to €269 million in a persisting soft market, as Christian alluded to during his introduction. Included in this result is the expected temporary decline in BMS revenues in 2025. Excluding the expected BMS revenue decline, there is a normalized year-on-year decline of 6% in the DNPD segment. As I mentioned in our last call, looking forward for BMS, we have strong work packages and an excellent asset pipeline.

Paul Hitchin: Let me guide you through the H1 results in more detail. Our H1 2025 group revenues reached EUR 371 million, a 5% decrease versus H1 2024, which has been impacted by two counterbalancing effects. Firstly, our D&PD revenues declined by 11% to EUR 269 million in a persisting soft market, as Christian alluded to during his introduction. Included in this result is the expected temporary decline in BMS revenues in 2025. Excluding the expected BMS revenue decline, there is a normalized year-on-year decline of 6% in the D&PD segment. As I mentioned in our last call, looking forward for BMS, we have strong work packages and an excellent asset pipeline. In contrast, Just – Evotec Biologics has continued to grow strongly in H1 2025, reaching EUR 102.2 million of revenue, which is up 16% versus H1 2024.

Speaker #4: Which has been impacted by two counterbalancing effects. Firstly, our DNPD revenues declined by 11% to $269 million euros, in a persisting soft market, as Christian alluded to during his introduction.

Speaker #4: Included in this result is the expected temporary decline in BMS revenues in 2025. Excluding the expected BMS revenue decline, there is a normalized year-on-year decline of 6% in the DNPD segment.

Speaker #4: As I mentioned in our last call, looking forward for BMS, we have strong work packages and an excellent asset pipeline. In contrast, Just Evotec by Logix has continued to grow strongly in the first half of 2025.

Paul Hitchin: In contrast, Just - Evotec Biologics has continued to grow strongly in the first half of 2025, reaching €102.2 million of revenue, which is up 16% versus the first half of 2024. The majority of the year-on-year growth is driven by the excellent growth of our business with non-Sandoz and DOD customers as we broaden our customer base. Our first half 2025 Sandoz business grew low single digits on a strong 2024 comparative, and our partnership with the DOD saw some low-value decline in revenues. Our remaining business showed an excellent growth in the first half, with 87% growth versus prior year, underlining our very positive outlook for the Just - Evotec Biologics business. It is worth noting that amongst our growing Just customer base, we have three major pharma companies who meaningfully contributed to our first half growth performance.

Speaker #4: Reaching €102.2 million in revenue, which is up 16% compared to the first half of 2024. The majority of the year-on-year growth is driven by the excellent performance of our business with non-Sandoz and DOD customers as we broaden our customer base.

Operator: The majority of the year-on-year growth is driven by the excellent growth of our business with non-Sandoz and DoD customers as we broaden our customer base. Our H1 2025 Sandoz business grew low single digits on a strong 2024 comparative, and our partnership with the DoD saw some low-value decline in revenues. Our remaining business showed an excellent growth in the H1 with 87% growth versus prior year, underlining our very positive outlook for the Just – Evotec Biologics business. It's worth noting that amongst our growing Just customer base, we have three major pharma companies who meaningfully contributed to our H1 growth performance. Our R&D spending has reduced by 35% versus prior year, from EUR 29.3 million in the H1 2024 to EUR 19 million in the H1 2025, as we direct our investments to those most relevant for our partners.

Speaker #4: Our first half, 2025 Sandoz business grew low single digits on a strong 2024 comparative, and our partnership with the DOD saw some low-value decline in revenues.

Speaker #4: Our remaining business showed excellent growth in the first half, with 87% growth versus the prior year, underlining our very positive outlook for the Just Evotec by Logix business.

Speaker #4: It's worth noting that amongst our growing Just customer base, we have three major pharma companies who meaningfully contributed to our first half growth performance.

Speaker #4: Our R&D spending has reduced by 35% versus the prior year, from €29.3 million in the first half of '24 to €19 million in the first half of 2025.

Paul Hitchin: Our R&D spending has reduced by 35% versus prior year, from €29.3 million in the first half of 2024 to €19 million in the first half of 2025, as we direct our investments to those most relevant for our partners. Our spending is broadly in line with our new expected run rate for the year as we continue to focus our R&D activities. Adjusted group EBITDA reached €1.9 million, driven by a stronger-than-expected contribution of €7.5 million in the Just - Evotec Biologics business, helped by positive operating leverage despite the Just organization build-out that we articulated in our April call. The strong contribution of our Just - Evotec Biologics business helped offset the lower operational leverage from the soft revenues in the DNPD segment. Despite the lower revenues in our DNPD segment, we have only seen a moderate impact on profitability. We are executing operationally with rigor.

Speaker #4: As we direct our investments to those most relevant for our partners. Our spending is broadly in line with our new expected run rate for the year, as we continue to focus our R&D activities.

Operator: Our spending is broadly in line with our new expected run rate for the year as we continue to focus our R&D activities. Adjusted group EBITDA reached EUR -1.9 million, driven by a stronger-than-expected contribution of EUR 7.5 million from the Just – Evotec Biologics business, helped by positive operating leverage despite the Just organization buildout that we articulated in our April call. The strong contribution of our Just – Evotec Biologics business helped offset the lower operational leverage from the soft revenues in the D&PD segment. Despite the lower revenues in our D&PD segment, we have only seen a moderate impact on profitability. We are executing operationally with rigor. Our cost-out initiatives are progressing well, with the initial target for the disciplined spending and hiring activities already being reached and external spend management progressing as expected.

Speaker #4: A Justed Group EBITDA reached negative €1.9 million, driven by a stronger-than-expected contribution of €7.5 million from the Just Evotec by Logix business, helped by positive operating leverage despite the Just organization buildout that we articulated in our April call.

Speaker #4: The strong contribution of our Just Evotec by Logix business helped offset the lower operational leverage from the soft revenues in the DNPD segment. Despite the lower revenues in our DNPD segment, we've only seen a moderate impact on profitability, we are executing operationally with rigor.

Speaker #4: Our cost-out initiatives are progressing well. With the initial target for the disciplined spending and hiring activities already being reached, and external spend management progressing as expected.

Paul Hitchin: Our cost-out initiatives are progressing well, with the initial target for the discipline spending and hiring activities already being reached and external spend management progressing as expected. In addition, we have added further recurring cost reductions, with an additional 2025 impact of around €10 million in the DNPD business. This takes our 2025 cost reduction plans to over €60 million, including the €30 million full-year impact of the Priority Reset program. Our additional measures are focused on lower external spending, higher restrictions across all of our sites. In summary, we have now reached an FTE reduction of 600 since March 2024, which is 200 FTE above the original Priority Reset target, and we have already realized about 50% of our updated cost-out target of €30 million.

Speaker #4: In addition, we have added a further recurring cost reductions with an additional 2025 impact of around 10 million euros in the DNPD business. This takes our 2025 cost reduction plans to over $60 million euros, including the $30 million euro full-year impact of the priority reset program.

Operator: We have added further recurring cost reductions with an additional 2025 impact of around EUR 10 million in the D&PD business. This takes our 2025 cost reduction plans to over EUR 60 million, including the EUR 30 million full-year impact of the priority reset program. Our additional measures are focused on lower external spending, higher restrictions across all of our sites. In summary, we have now reached an FTE reduction of 600 since March 2024, which is 200 FTE above the original priority reset target. We've already realized about 50% of our updated cost-out target of EUR 30 million. Continuing with our cash flows, in line with our expectations, operating cash flow further improved in Q2, including the expected receipts of the BMS completed work packages that we announced previously.

Speaker #4: Our additional measures are focused on lower external spending, higher restrictions across all of our sites. In summary, we have now reached an FTE reduction of 600 since March 2024.

Speaker #4: Which is 200 FTE above the original priority reset target. And we've already realized about 50% of our updated cost-out target of $30 30 million euros.

Speaker #4: Continuing with our cash flows, in line with our expectations, operating cash flow further improved in the second quarter, including the expected receipts of the BMS completed work, packages that we announced previously.

Paul Hitchin: Continuing with our cash flows, in line with our expectations, operating cash flow further improved in the second quarter, including the expected receipts of the BMS completed work packages that we announced previously. Investing cash flow in the second quarter of 2025 is in line with our Q1 figures and is largely driven by our CAPEX spending of €19 million in the second quarter of 2025. Our first half 2025 CAPEX saw a 50% decline to our 2024 levels as we move towards the new CAPEX base level I mentioned in the April update. Overall, our liquidity has been developing as we expected, with a decrease of €23 million to €348 million, driven by regular lease and scheduled debt payments of €18 million and a negative FX difference of €7.5 million, both partially compensated by positive net inflow from operating and investing activities.

Speaker #4: Investing cash flow in the second quarter of 2025 is in line with our Q1 figures, and is largely driven by our CapEx spending of 19 million euros in the second quarter of 2025.

Operator: Investing cash flow in Q2 2025 is in line with our Q1 figures and is largely driven by our capex spending of EUR 19 million in Q2 2025. Our H1 2025 capex saw a 50% decline to our 2024 levels as we move towards the new capex base level I mentioned in the April update. Overall, our liquidity has been developing as we expected, with a decrease of EUR 23 million to EUR 348 million, driven by regular lease and scheduled debt payments of EUR 18 million and a -FX difference of EUR 7.5 million, both partially compensated by +net inflow from operating and investing activities. We have stable financing and proactive liquidity management. Following our decision to cancel our unutilized and not currently required RCF facility, our financing is no longer restricted by covenants.

Speaker #4: Our first half 2025 CapEx saw a 50% decline from our 2024 levels, as we moved towards the new CapEx base level I mentioned in the April update.

Speaker #4: Overall, our liquidity has been developing as we expected. With a decrease of 23 million euros to 348 million euros, driven by regular lease and scheduled debt payments of 18 million, and a negative FX difference of 7.5 million euros.

Speaker #4: Both partially compensated by positive net inflow from operating and investing activities. We have stable financing, and proactive liquidity management, and following our decision to cancel our unutilized and not currently required RCF facility, our financing is no longer restricted by covenants.

Paul Hitchin: We have stable financing and proactive liquidity management, and following our decision to cancel our unutilized and not currently required RCF facility, our financing is no longer restricted by covenants. Now, let me hand back to Christian, who will provide an update on some of our strategic developments.

Speaker #4: Now, let me hand back to Christian, who will provide an update on some of our strategic developments.

Christian Wojczewski: Let me hand back to Christian, who will provide an update on some of our strategic developments. Thank you, Paul. Let us dive deeper into strategically important developments in both segments DNPD and GEP. Our commitment to technology and science leadership remains unwavering. The continued development of our molecular patient data platform, E.MPD, underscores our dedication to precision medicine. Most recently, the platform was expanded to include the NURTuRE Cohort, comprising approximately 3,000 patients with acute kidney injury. It's our conviction that deep understanding of molecular mechanisms based on real patient data are fundamental to accelerate the drug discovery journey and to better support target identification and validation. What sets Evotec's MPD apart is the unparalleled breadth and depth of its patient-related data, encompassing both high-quality clinical information and a wide range of omics data.

Speaker #3: Thank you, Paul. Let us now dive deeper into strategically important developments in both segments, DNPD and JEP. Our commitment to technology and science leadership remains unwavering.

Cord Dohrmann: Thank you, Paul. Let us now dive deeper into strategically important developments in both segments, DNPD and DEPB. Our commitment to technology and science leadership remains unwavering. The continued development of our molecular patient database, EMPD, underscores our dedication to precision medicine. Most recently, the platform was expanded to include the Nurture cohort, comprising approximately 3,000 patients with acute kidney injury. It is our conviction that deep understanding of molecular mechanisms based on real patient data is fundamental to accelerate the drug discovery journey and to better support target identification and validation. What sets Evotec's EMPD apart is the unparalleled breadth and depth of its patient-related data, encompassing both high-quality clinical information and a wide range of omics data. This level of quality, depth, and consistency clearly differentiates it from publicly available datasets.

Speaker #3: The continued development of our molecular patient data platform, EMPD, underscores our dedication to precision medicine. Most recently, the platform was expanded to include the nurture cohort, comprising approximately 3,000 patients, with acute kidney injury.

Speaker #3: It's our conviction that deep understanding of molecular mechanisms, based on real patient data, are fundamental to accelerate the drug discovery journey and to better support target identification and validation.

Speaker #3: What sets Evotec's NPD apart is the unparalleled breadth and depth of its patient-related data, encompassing both high-quality clinical information and a wide range of omics data.

Speaker #3: This level of quality depth and consistency clearly differentiates it from publicly available data sets. With data from over 27,000 patients across chronic kidney disease, immune-mediated inflammatory diseases, and metabolic disorders, we reinforce our leadership in these therapeutic areas.

Operator: This level of quality, depth, and consistency clearly differentiates it from publicly available data sets. With data from over 27,000 patients across chronic kidney disease, Immune-Mediated Inflammatory Diseases, and metabolic disorders, we are reinforcing our leadership in these therapeutic areas. Our ambition goes further. Our Molecular Patient Database has now reached critical mass, enabling us to explore disease areas beyond our initial focus. As is often the case, many patients suffer from multiple comorbidities, opening new avenues for discovery. For example, we're now identifying and validating novel targets in women's health. Another area that has reached critical mass is obesity, one of the most active research fields in biopharma these days. We're committed to systematically expanding our database to deepen disease understanding where there is both medical need and commercial opportunity.

Cord Dohrmann: With data from over 27,000 patients across chronic kidney disease, immune-mediated inflammatory diseases, and metabolic disorders, we are reinforcing our leadership in these therapeutic areas. Our ambition goes further. Our molecular patient database has now reached critical mass, enabling us to explore disease areas beyond our initial focus. As is often the case, many patients suffer from multiple comorbidities, opening new avenues for discovery. For example, we are now identifying and validating novel targets in women's health. Another area that has reached critical mass is obesity, one of the most active research fields in biopharma these days. We are committed to systematically expanding our database to deepen disease understanding where there is both medical need and commercial opportunity. Our industry-leading kidney franchise exemplifies how scientific and technological leadership in drug discovery opens up business opportunities that go far beyond traditional CRO services.

Speaker #3: But our ambition goes further. Our molecular patient database has now reached critical mass, enabling us to explore disease areas beyond our initial focus. As is often the case, many patients suffer from multiple comorbidities.

Speaker #3: Opening new avenues for discovery, for example, we're now identifying and validating novel targets in women's health. Another area that has reached critical mass is obesity, one of the most active research fields in biopharma these days.

Speaker #3: And we're committed to systematically expanding our database to deepen disease understanding where there is both medical need and commercial opportunity. Our industry-leading kidney franchise exemplifies how scientific and technological leadership in drug discovery opens up business opportunities that go far beyond traditional CRO services.

Operator: Our industry-leading kidney franchise exemplifies how scientific and technological leadership in drug discovery opens up business opportunities that go far beyond traditional CRO services. It expands our addressable market and significantly enhances value creation. Evotec not only earns revenue through service fees but also participates meaningfully in the success of partner programs via milestones and royalties. High-throughput omics alone would usually not qualify for substantial commercial upside. The true value lies in the ability to translate data into actionable insights. This is the essence of our model, empowering others to discover and develop innovative treatments. In chronic kidney disease, we've repeatedly demonstrated our ability to scale the platform, as illustrated here in this chart. We're applying the same capabilities to diseases driven by inflammatory and immunologic mechanisms. As our patient database continues to grow, it will serve as a catalyst for new strategic collaborations.

Speaker #3: The expanse our addressable market and significantly enhances value creation. Evotec not only earns revenue, through service fees, but also participates meaningfully in the success of partner programs via milestones and royalties.

Cord Dohrmann: It expands our addressable market and significantly enhances value creation. Evotec not only earns revenue through service fees but also participates meaningfully in the success of partner programs via milestones and royalties. High-throughput omics alone would usually not qualify for substantial commercial upside. The true value lies in the ability to translate data into actionable insights. This is the essence of our model, empowering others to discover and develop innovative treatments. In chronic kidney disease, we have repeatedly demonstrated our ability to scale the platform, as illustrated here in this chart. We are applying the same capabilities to diseases driven by inflammatory and immunologic mechanisms. As our patient database continues to grow, it will serve as a catalyst for new strategic collaborations. Moving over to a large molecule business.

Speaker #3: As we put omics alone would usually not qualify for substantial commercial upside. The true value lies in the ability to translate data into actionable insights.

Speaker #3: This is the essence of our model: empowering others to discover and develop innovative treatments. In chronic kidney disease, we've repeatedly demonstrated our ability to scale the platform.

Speaker #3: As illustrated here in this chart. And we're applying the same capabilities to diseases driven by inflammatory and immunologic mechanisms. As our patient database continues to grow, it will serve as a catalyst for new strategic collaborations.

Speaker #3: Moving over to a large molecule business, with regard to Just Evotec by Logix, back in April, I explained that the potential of this asset is not yet fully exploited, and that we're considering ways to better monetize our technology.

Operator: Moving over to our large molecule business, with regard to Just – Evotec Biologics back in April, I explained that the potential of this asset is not yet fully exploited and that we're considering ways to better monetize our technology. We're planning to further strengthen our intellectual property and leadership position in the continuous manufacturing process technology in cell lines and other areas. This will allow us to enlarge our addressable market, providing access to new revenue streams and growth. We also announced that we are pivoting towards a capex-lighter business model, and we are not contemplating investing into a network of J.PODs. The new strategy will significantly improve our return on investment through better revenue mix with higher margin business and reduced demand for capital. Today, a few months after our announcement, this strategy is already starting to get in shape.

Cord Dohrmann: With regard to Just - Evotec Biologics, back in April, I explained that the potential of this asset is not yet fully exploited and that we are considering ways to better monetize our technology. We are planning to further strengthen our intellectual property and leadership position in the continuous manufacturing process technology in cell lines and other areas. This will allow us to enlarge our addressable market, providing access to new revenue streams and growth. We also announced that we are pivoting towards a CapEx-lighter business model, and we are not contemplating to invest into a network of JPOTs. The new strategy will significantly improve our return on investment through a better revenue mix with higher margin business and reduced demand for capital. Today, a few months after our announcement, this strategy is already starting to get in shape.

Speaker #3: We're planning to further strengthen our intellectual property, and leadership position in the continuous manufacturing process technology, in cell lines, and other areas. This will allow us to enlarge our addressable market, providing access to new revenue streams and growth.

Speaker #3: We also announced that we are pivoting towards a CapEx lighter business model. And we're not contemplating to invest into a network of JPOTs. The new strategy will significantly improve our return on invest through better revenue mix, with higher margin business, and reduced demand for capital.

Speaker #3: Today, a few months after our announcement, this strategy is already starting to take shape. At Just Evotec by Logix, we are entering into a new area of biomanufacturing, one defined by agility and scalability.

Operator: At Just – Evotec Biologics, we are entering into a new area of biomanufacturing, one defined by agility and scalability. We think that narrowing down this business model to simply a manufacturing and capacity play does not give it justice. Just like we're developing the next-generation technology platforms for small molecules in our D&PD business, we're now also shaping the next-generation CDMO model for biologics. Our customers are excited about the cutting-edge features of our technology and the new degrees of freedom it offers to them to manufacture biologics. Our goal is to enable them to bring the next generation of medicines to market faster, smarter, and more sustainably, at top quality and unrivaled efficiency, regardless if with Evotec-owned manufacturing capacity or indirectly through our technology. Our US operations have always been and will remain the center of excellence for biologics discovery, process development, and manufacturing.

Cord Dohrmann: At Just - Evotec Biologics, we are entering into a new area of biomanufacturing, one defined by agility and scalability. We think that narrowing down this business model to simply a manufacturing and capacity play does not give it justice. Just like we are developing the next-generation technology platforms for small molecules in our DNPD business, we are now also shaping the next-generation CDMO model for biologics. Our customers are excited about the cutting-edge features of our technology and the new degrees of freedom it offers to them to manufacture biologics. Our goal is to enable them to bring the next generation of medicines to market faster, smarter, and more sustainably, at top quality and unrivaled efficiency, regardless if with Evotec-owned manufacturing capacity or indirectly through our technology. Our U.S.

Speaker #3: We think that narrowing down this business model to simply a manufacturing and capacity play does not give it justice. Just like we're developing in the next generation technology platforms for small molecules in our DNPD business, we're now also shaping the next generation CDMO model, for biologics.

Speaker #3: Our customers are excited about the cutting-edge features of our technology and the new degrees of freedom it offers them to manufacture biologics. Our goal is to enable them to bring the next generation of medicines to market faster, smarter, and more sustainably, at top quality and unrivaled efficiency.

Speaker #3: Regardless if with Evotec-owned manufacturing capacity or indirectly through our technology. Our US operations have always been and will remain the center of excellence, for biologics discovery, process development, and manufacturing.

Cord Dohrmann: operations have always been and will remain the center of excellence for biologics discovery, process development, and manufacturing, and that is where we will continue to innovate. In light of a deep funnel of projects with originators, we see ample opportunities to grow while we pivot towards an asset-lighter business model, leading to a high return on investment. Within the classic CDMO market for biologics, which is characterized by a robust double-digit market growth, Just is shaping the subsegment for continuous manufacturing. Technology advantages will allow this new segment to gain share over the next couple of years. Beyond the manufacturing market, Evotec will now be able to also tap into adjacent opportunities, such as the markets for cell lines and serum-free media, both expected to grow at healthy rates. Those product classes are developed in-house at Just - Evotec Biologics.

Speaker #3: And that is where we will continue to innovate. In light of a deep funnel of projects with originators, we see ample opportunities to grow, while we pivot towards an asset lighter business model, leading to a high return on investment.

Operator: That is where we will continue to innovate. In light of a deep funnel of projects with originators, we see ample opportunities to grow while we pivot towards an asset-lighter business model leading to a high return on investment. Within the classic CDMO market for biologics, which is characterized by a robust double-digit market growth, Just is shaping the subsegment for continuous manufacturing. Technology advantages will allow this new segment to gain share over the next couple of years. Beyond the manufacturing market, Evotec will now be able to also tap into adjacent opportunities such as the markets for cell lines and serum-free media, both expected to grow at healthy rates. Those product classes are developed in-house at Just – Evotec Biologics. They are today important components of an integrated or standalone offering together with our process technology.

Speaker #3: Within the classic CDMO market for biologics, which is characterized by a robust double-digit market growth, Just is shaping the subsegment for continuous manufacturing. Technology advantages will allow this new segment to gain share over the next couple of years.

Speaker #3: Beyond the manufacturing market, Evotec will now be able to also tap into adjacent opportunities, such as the markets for cell lines, and serum-free media, both expected to grow at healthy rates.

Speaker #3: Those product classes are developed in-house at Just Evotec by Logix. They are today important components of an integrated or standalone offering, together with our process technology.

Cord Dohrmann: They are today important components of an integrated or standalone offering, together with our process technology. Given the industry-leading performance of our cell lines and media, we are able to elevate the output and efficiency of biologics manufacturing to the next level. We are therefore comfortable that we will be able to create exciting new business opportunities beyond the classic capital-intensive CDMO play. To the extent possible, let me now briefly address the recently announced agreement with our partner, Sandoz. On July 30, Evotec and Sandoz announced the signing of a non-binding agreement regarding the potential sale of Just - Evotec Biologics EU, which owns the JPOT Biologics manufacturing facility in Toulouse, France, and to grant access to its proprietary platform for integrated development and advanced continuous manufacturing of biologics via a technology license.

Speaker #3: Given the industry-leading performance of our cell lines and media, we're able to elevate the output and efficiency of biologics manufacturing to the next level.

Operator: Given the industry-leading performance of our cell lines and media, we're able to elevate the output and efficiency of biologics manufacturing to the next level. We're therefore comfortable that we will be able to create exciting new business opportunities beyond a classic capital-intensive CDMO play. To the extent possible, let me now briefly address the recently announced agreement with our partner, Sandoz. On 30 July, Evotec and Sandoz announced the signing of a non-binding agreement regarding the potential sale of Just–Evotec Biologics EU, which owns the J.POD Biologics manufacturing facility in Toulouse, France, and to grant access to its proprietary platform for integrated development and advanced continuous manufacturing of biologics via a technology license. The agreement is a testament for our world-class continuous manufacturing technology and reflects the successful progression of our strategy to leverage our capabilities in a more capital-efficient way.

Speaker #3: We're therefore comfortable that we will be able to create exciting new business opportunities beyond the classic capital-intensive CDMO play. To the extent possible, let me now briefly address the recently announced agreement with our partner, Sandoz.

Speaker #3: On July 13th, Evotec and Sandoz announced the signing of a non-binding agreement regarding the potential sale of Just Evotec by Logix EU, which owns the JPOT by Logix manufacturing facility in Toulouse, France.

Speaker #3: And to grant access to its proprietary platform for integrated development, and advance continuous manufacturing of biologics via a technology license. The agreement is a testament to our world-class continuous manufacturing technology and reflects the successful progression of our strategy to leverage our capabilities in a more capital-efficient way.

Cord Dohrmann: The agreement is a testament to our world-class continuous manufacturing technology and reflects the successful progression of our strategy to leverage our capabilities in a more capital-efficient way. This step marks the natural evolution of our partnership. The site in Toulouse has been dedicated entirely to Sandoz since July 2024. We are now progressing to the next phase in which we will hand over the site to Sandoz, while our partnership will move toward enabling Sandoz to manufacture on-site and to a new revenue model. The planned transaction perfectly matches with our strategy to move toward an asset-lighter, higher margin business model, one that leverages our proprietary technology, scales through partnerships, removes the capacity ceiling for growth, and delivers superior returns.

Speaker #3: This step marks a natural evolution of our partnership. The site in Toulouse has been dedicated entirely to Sandoz since July 2024. We're now progressing to the next phase, in which we will hand over the site to Sandoz while our partnership will move towards enabling Sandoz to manufacture on-site and adopt a new revenue model.

Operator: This step marks the natural evolution of our partnership. The site in Toulouse has been dedicated entirely to Sandoz since July 2024. We are now progressing to the next phase in which we will hand over the site to Sandoz while our partnership will move toward enabling Sandoz to manufacture on-site and to a new revenue model. The planned transaction perfectly matches with our strategy to move toward an asset-lighter, higher-margin business model, one that leverages our proprietary technology scales through partnerships, removes the capacity ceiling for growth, and delivers superior returns. Through the planned transfer of our J.POD Toulouse facility to Sandoz, we are monetizing a world-class asset while retaining the core IP, the platform capabilities, and the strategic upside. It is the deployment of our technology at scale through a trusted partner in a way that accelerates both impact and profitability.

Speaker #3: The planned transaction perfectly matches with our strategy to move toward an asset-light, higher-margin business model, one that leverages our proprietary technology, scales through partnerships, removes the capacity ceiling for growth, and delivers superior returns.

Speaker #3: Through the planned transfer of our JPOT Toulouse facility to Sandoz, we're monetizing a world-class asset, while retaining the core IP, the platform, capabilities, and the strategic upside.

Cord Dohrmann: Through the planned transfer of our JPOT Toulouse facility to Sandoz, we are monetizing a world-class asset while retaining the core IP, the platform capabilities, and the strategic upside. It is the deployment of our technology at scale to its trusted partner in a way that accelerates both impact and profitability. It comprises economic benefits in the short, medium, and long term, including around $300 million USD consideration for the site, plus technology license fees, multi-year development revenues, milestones, and royalties. What are the next steps? We have entered a phase of trustful discussions with the Works Council representatives. Closing of the planned transaction remains subject to completion of the relevant information and consultation processes with employees and their representatives, final contractual agreements, and meeting regulatory requirements expected in the fourth quarter.

Speaker #3: It's a deployment of our technology at scale, with trusted partner, in a way that accelerates both impact and profitability. It comprises economic benefits in the short, medium, and long-term, including around $300 300 million US dollars consideration for the site, plus technology license fees, multi-year development revenues, milestones, and royalties.

Operator: It comprises economic benefits in the short, medium, and long term, including around $300 million consideration for the site, plus technology license fees, multi-year development revenues, milestones, and royalties. What are the next steps? We have entered a phase of trustful discussions with the works council representatives. Closing of the planned transaction remains subject to completion of the relevant information and consultation processes with employees and their representatives, final contractual agreements, and meeting regulatory requirements expected in Q4. The planned transaction would immediately improve Evotec's revenue mix, profit margins, and capital efficiency. I'm aware this call will not answer all your questions. We are informing the markets based on the release you saw on 30 July and because of the advanced stage and the materiality of the transaction. More details will follow once we have concluded the process.

Speaker #3: What are the next steps? We have entered a phase of trustful discussions with the Works Council representatives. Closing of the planned transaction remains subject to completion of the relevant information and consultation processes with employees and their representatives, final contractual agreements, and meeting regulatory requirements, expected in Q4.

Speaker #3: The planned transaction would immediately improve Evotec's revenue mix, profit margins, and capital efficiency. I'm aware this call will not answer all your questions. We are informing the markets based on the release you saw on July the 30th, and because of the advanced stage and the materiality of the transaction.

Cord Dohrmann: The planned transaction would immediately improve Evotec's revenue mix, profit margins, and capital efficiency. I am aware this call will not answer all your questions. We are informing the markets based on the release you saw on July 30, and because of the advanced stage and the materiality of the transaction, more details will follow once we have concluded the process. Hence, we will not go into further content of the deal today. After having adjusted our revenue guidance to keeping our EBITDA guidance unchanged in July, we confidently confirm our full-year 2025 guidance. While foreign currency fluctuation has had an immaterial impact in the first half, we see a higher impact in the second half, which will be offset by improved business mix. The main drivers of our full-year adjusted EBITDA profile reflect improved cost performance and changing revenue mix with a higher share of high-margin revenues.

Speaker #3: More details will follow once we have concluded the process. Hence, we will not go into further content of the deal today. After adjusting our revenue guidance while keeping our EBITDA guidance unchanged in July, we confidently confirm our full-year 2025 guidance.

Operator: We will not go into further content of the deal today. After having adjusted our revenue guidance and keeping our EBITDA guidance unchanged in July, we confidently confirm our full-year 2025 guidance. Foreign currency fluctuation has had an immaterial impact in H1, we see a higher impact in H2, which will be offset by improved business mix. The main drivers of our full-year adjusted EBITDA profile reflect improved cost performance and changing revenue mix with a higher share of high-margin revenues. With regard to the midterm outlook, the key message is we are on track. Levers for midterm value creation remain the same. For two out of the four, we can already share that we are making remarkable progress. As discussed, we've received validation for J.POD's continuous manufacturing technology and made significant progress to a more capital-efficient model that better leverages our technology.

Speaker #3: Whilst foreign currency fluctuation has had an immaterial impact in the first half, we see a high impact in the second half, which will be offset by improved business mix.

Speaker #3: The main drivers of our full-year adjusted EBITDA profile reflect improved cost performance, and changing revenue mix with a higher share of high-margin revenues. With regard to the mid-term outlook, the key message is, we are on track.

Cord Dohrmann: With regard to the midterm outlook, the key message is we are on track. Levers for midterm value creation remain the same, and for two out of the four, we can already share that we are making remarkable progress. As discussed, we have received validation for Just - Evotec Biologics' continuous manufacturing technology and made significant progress to a more capital-efficient model that better leverages our technology. We are ahead of plan in our implementation of operational excellence, with further productivity improvements anticipated in the near term. Structural changes in mix remain within the boundaries of our midterm outlook. Our asset pipeline is on track with an unchanged number of six programs in clinical trial stage. It is encouraging to see that discussions with customers translate into tangible results. Once the transaction with Sandoz is signed, we can confidently state that the visibility towards our midterm goals will improve substantially.

Speaker #3: Leave us for mid-term value creation remains the same, and for two out of the four, we can already share that we're making remarkable progress.

Speaker #3: As discussed, we've received validation for JEP's continuous manufacturing technology, and made significant progress to a more capital-efficient model, that better leverage our leverages our technology.

Speaker #3: And we're ahead of plan in our implementation of operational excellence, with further productivity improvements anticipated in the near term. Structural changes in mix remain within the boundaries of our mid-term outlook.

Operator: We're ahead of plan in our implementation of operational excellence with further productivity improvements anticipated in the near term. Structural changes in mix remain within the boundaries of our midterm outlook. Our asset pipeline is on track with an unchanged number of six programs in clinical trial stage. It is encouraging to see that discussions with customers translate into tangible results. Once the transaction with Sandoz is signed, we can confidently state that the visibility towards our midterm goals will improve substantially. Our 2028 aspiration remains bold but grounded: 8% to 12% revenue CAGR and greater than 20% EBITDA margin. These are not just numbers. They are reflections of our strategic conviction. With differentiated offerings, operating leverage, and continued innovation, we're poised for long-term growth. Evotec is on track. We're moving quickly towards a simpler, more focused organization. The team is energized. Strategy is clear.

Speaker #3: Our asset pipeline is on track, with an unchanged number of six programs in clinical trial stage. It is encouraging to see that discussions with customers translate into tangible results, once the transaction with Sandoz is signed, we can confidently state that the visibility towards our mid-term goals will improve substantially.

Speaker #3: Therefore, our 2028 aspiration remains, bold but grounded, 8 to 12% revenue CAGR, and greater than 20% EBITDA margin. These are not just numbers, they are a reflection of our strategic conviction.

Cord Dohrmann: Therefore, our 2028 aspiration remains bold but grounded: 8-12% revenue CAGR and greater than 20% EBITDA margin. These are not just numbers; they are reflections of our strategic conviction. With differentiated offerings, operating leverage, and continued innovation, we are poised for long-term growth. Evotec is on track. We are moving quickly towards a simpler, more focused organization. The team is energized. Strategy is clear. We will continue to shape the future of drug discovery and development. Let us now take your questions. Thank you. Back to the operating room.

Speaker #3: With differentiated offerings, operating leverage, and continued innovation, we're poised for long-term growth. Evotec is on track, we're moving quickly towards a simpler, more focused organization, a team of energized, strategies clear, we will continue to shape the future of drug discovery and development.

Operator: We will continue to shape the future of drug discovery and development. Let's now take your questions. Thank you. Back to the operator. We will now begin the question and answer session. The first question comes from the line of Charles Weston from RBC Europe. Please go ahead. Hello. Thank you for taking the questions. I have 3, please. I'll just take them one at a time.

Speaker #3: Let's now take your questions. Thank you. Back to the operator.

Speaker #5: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.

Matilde (Quarters Call Operator): We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only headsets while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Charles Weston from RBC Europe. Please go ahead.

Speaker #5: You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two.

Speaker #5: Participants are requested to use only headsets, while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Charles Weston, from RBC Europe.

Speaker #5: Please go ahead.

Speaker #6: Hello, thank you for taking the questions. I have three, please. I'll just take them one at a time. On the first is in terms of your guidance for this year, you say you expect a recovery, in the balance between early-stage and late-stage funding.

Charles Weston: Hello. Thank you for taking the questions. I have three, please. I will just take them one at a time. The first is in terms of your guidance for this year. You say you expect a recovery in the balance between early-stage and late-stage funding. How much of that recovery is built into the guide for 2025, please?

Charles Weston: First, in terms of your guidance for this year, you say you expect a recovery in the balance between early-stage and late-stage funding. How much of that recovery is built into the guide for 2025, please? The statement was referring to recovery of the VC funding. We don't expect that this is translating into H2 impact. Charles, it's Paul. When we think about the guidance for the year on the D&PD business, the dynamics that we have seen in H1, we are planning for similar dynamics in H2. Perfect. Thank you. Secondly, you've divided your R&D business into transactional, integrated, and large pharma. Could you give us a kind of a breakdown proportionally of the revenues there?

Speaker #6: How much of that recovery is built into the guide for 2025, please?

Speaker #4: So, the statement was referring to the recovery of the VC funding; we don't expect that this is translating into second-half impact.

Paul Hitchin: The statement was referring to recovery of the VC funding. We do not expect that this is translating into impact. Charles, it is Paul. When we think about the guidance for the year on the DNPD business, the dynamics that we proceed in the first half, we are planning for similar dynamics in the second half.

Speaker #2: Hey Charles, it's Paul, what you should, when we think about the guidance for the year, on the DP&D business, the dynamics that we have seen in the first half, we are planning for similar dynamics in the second half.

Speaker #6: Perfect, thank you. secondly, you've, divided your, R&D business into transactional integrated and large pharma. could you give us a kind of a breakdown proportionally of the revenues, there, and, you've given a little bit of color in terms of what the growth would have been, or the smaller contraction that would have been, for the first half, excluding BMS, but could you perhaps touch on, in terms of those three buckets, you know, what the proportions are by revenue, and what the, current growth rates are, please?

Charles Weston: Perfect. Thank you. Secondly, you have divided your R&D business into transactional, integrated, and large pharma. Could you give us a kind of a breakdown proportionally of the revenues there? You have given a little bit of color in terms of what the growth would have been or the smaller contraction that would have been for the first half exceeding BMS. But could you perhaps touch on, in terms of those three buckets, what the proportions are by revenue and what the current growth rates are, please?

Charles Weston: You've given a little bit of colour in terms of what the growth would have been or the smaller contraction that would have been for H1 excluding BMS. Could you perhaps touch on, in terms of those three buckets, what the proportions are by revenue and what the current growth rates are, please? Charles, we're not breaking this into details and not reporting. If you recall the last meeting, the last analyst call, I mentioned that the dynamics are such that the transactional part is shrinking relative to the integrated and large partnership portion. The latter part, the integrated and the strategic partnerships, have been growing in size relative to the transactional of the last couple of years. We expect this to continue also in our strategic planning.

Speaker #4: Charles, we're not, we're not, breaking this, into details, and not reporting, but, if you recall the last meeting, the last analyst call I mentioned, that the the dynamics is such that the, transactional part, is shrinking relative to the integrated and large, partnership, portion.

Paul Hitchin: Charles, we are not breaking this into details and not reporting, but if you recall the last meeting, the last analyst call, I mentioned that the dynamics are such that the transactional part is shrinking relative to the integrated and large partnership portion. The latter part, the integrated and the strategic partnerships have been growing in size relative to the transactional over the last couple of years. We expect this to continue also in our strategic planning. That said, I also mentioned that we want to have a more bespoke commercial setup, because we feel that we actually can also do better on the transactional side.

Speaker #4: So, the the latter part, the integrated and the strategic partnerships, have been growing in size relative to the transactional of the last couple of years, we expect this to continue also in our strategic planning, that said, I also mentioned that we want to have a more, bespoke commercial setup, because we feel that we actually can also do better on the transactional side.

Charles Weston: That said, I also mentioned that we want to have a more bespoke commercial setup because we feel that we actually can also do better on the transactional side. Okay. Thank you. Just the last question. I appreciate you've been clear. You're not going to provide concrete numbers on the impact on the Sandoz deal. Could you just perhaps give us some colour philosophically on how we should be thinking about the value transfer from Evotec to Sandoz from this deal in return for that EUR 300? If I'm looking out a number of years, how should I be thinking about the potential EBITDA contribution post this deal compared to before, appreciating no hard numbers? All right. Let me maybe make a couple of statements first. I'm pretty sure Paul in a second will tell you that we can't talk about it.

Speaker #6: Okay, thank you. And just the last question, I appreciate you've been clear, you're not going to provide, concrete numbers on the sound of the impact on the Sandoz deal, but can you just, perhaps give us some color, philosophically, on how we should be thinking about the value transfer, from Evotec, to Sandoz, from this deal, in return for that $300?

Charles Weston: Okay. Thank you. Just the last question. I appreciate you have been clear you are not going to provide concrete numbers on the impact on the Sandoz deal, but can you just perhaps give us some color philosophically on how we should be thinking about the value transfer from Evotec to Sandoz from this deal in return for that 300? If I am looking out a number of years, how should I be thinking about the potential EBITDA contribution from this deal post this deal compared to before? I appreciate you are giving no hard numbers.

Speaker #6: So, you know, if I'm looking at a number of years, how should I be thinking about the potential EBITDA contribution from this deal, post this deal, compared to before?

Speaker #6: I appreciate there's no hard numbers.

Speaker #4: All All right, so let me maybe, make a couple of statements first, and I'm pretty sure Paul in a second will tell you that we can't talk about it.

Paul Hitchin: All right. Let me maybe make a couple of statements first, and I am pretty sure Paul in a second will tell you that we cannot talk about it. A bit of context maybe because I fully expect that there will be similar questions also after you, Charles. First of all, maybe a bit broader context here. We are executing our strategy from a position of strength. We have got a proven world-class technology at Just - Evotec Biologics. Our customers are excited about the cutting-edge performance of the cell lines, the media, the processes, our development capabilities. We are growing outside of the Sandoz and DOD business at high speed. If you maybe have caught the number that Paul was mentioning, 87% in the first half. It is growing at fast speed.

Speaker #4: But, a bit of context maybe, because I fully expect that there will be similar questions, also, after you, Charles. So first of all, maybe a bit broader context here.

Operator: A bit of context maybe because I fully expect that there will be similar questions also after you, Charles. First of all, maybe a bit broader context here. We are executing our strategy from a position of strength. We've got a proven world-class technology at Just – Evotec Biologics. Our customers are excited about the cutting-edge performance of the cell lines, the media, the processes, our development capabilities. We are growing outside of the Sandoz and DoD business at high speed. If you maybe have caught the number that Paul was mentioning, 87% in the H1. It's growing at fast speed. The value, in our view, or majority of the value of the business, sits in the technology capabilities IP people would have. We said earlier this year that we plan to monetize this value better. You've heard us talking about licensing fields.

Speaker #4: we are executing our strategy from a position of strength. we've got a proven world-class technology at Just Evotec by Logix. Our customers are excited about the cutting-edge performance of the cell lines, the media, the processes, our development capabilities.

Speaker #4: We are growing outside of the Sandoz and DOD business at high speed, if you maybe, have, caught the number that Paul was mentioning, 87% in the first half.

Speaker #4: So it's growing at, at, at fast speed. The value in our view, or majority of the value of the business, sits in the technology capabilities, IP people we have.

Paul Hitchin: The value, in our view, a majority of the value of the business sits in the technology capabilities, IP, people. We said earlier this year that we plan to monetize this value better. You have heard us talking about licensing fees. You have heard us talking about royalties. We also said that we want to enable our partners to use the technology. You have heard us talking about continued revenue flows and milestone payments. Yes, we are also selling a site, for which the consideration is around $300 million. Think about this as a partnership that has been going on since long, and now we are changing a bit the parameters. Obviously, we do that because it fits perfectly with the strategy and because we think it makes economically a lot of sense. Paul, anything to add?

Speaker #4: We said earlier this year that we plan to monetize this value better, you've heard us talking about licensing fees, you've talked heard us talking about royalties, we also said that we want to enable our partners to use the technology, so you've heard us talking about continued revenue flows, and milestone payments, and yes, we are also selling a site for which the consideration is around $300 million.

Operator: You've heard us talking about royalties. We also said that we want to enable our partners to use the technology. You've heard us talking about continued revenue flows and milestone payments. Yes, we are also selling a site for which the consideration is around USD 300 million. Think about this as a partnership that has been going on since long. Now we're changing a bit the parameters. Obviously, we do that because it fits perfectly with the strategy and because we think it makes economically a lot of sense. Paul, anything to add? I think, Christian, you've pretty much covered what we can say at this point in time. As Christian Riley says, the consideration of USD 300 million reflects the value for the site. In addition, technology consideration, future development revenues, milestones, and product royalties will be part of our ongoing revenue streams. Okay.

Speaker #4: So think about this, you know, as a partnership that has been going on since long, and now we're changing a bit the parameters, but obviously, we do that because it fits perfectly with the strategy, and because we think it makes economically a lot of sense.

Speaker #4: Paul? Anything to add?

Speaker #2: I I think, I think Christian, you've you've pretty much covered what we can say at this point in time, as, as Christian rightly says, the consideration of $300 million reflects the value of the site.

Cord Dohrmann: I think Christian, you have pretty much covered what we can say at this point in time. As Christian Wojczewski says, the consideration of $300 million reflects the value for the site. In addition, technology consideration, future development revenues, milestones, and product royalties will be part of our ongoing revenue streams.

Speaker #2: In addition, technology consideration, future development revenues, milestones, and, and, product royalties, will be part of our ongoing, revenue streams.

Speaker #6: Okay, thanks for the color. Cheers.

Charles Weston: Okay. Thanks for the color. Cheers.

Charles Weston: Thanks for the color. Cheers. The next question comes from the line of Brendan Smith from TD Cowen. Please go ahead. Great. Thanks, guys, for taking the questions. I wanted to actually ask a bit more about the D&PD segment. I understand some of the spending uncertainty from pharma. It makes sense given everything going on. I'm actually wondering if you can speak just a bit more to what you're hearing in conversations there and even broad strokes what some of the trends are in driving those decisions. I guess, does it seem to you that customers are shifting spend toward lower-risk indications or away from higher-risk innovation? Just kind of wondering if there's anything consistent there to help us understand what could turn that around in the coming months. Did you say large pharma or biotech? Sorry. Both if you're able to provide it.

Speaker #5: The The next question comes from the line of Brandon Smith, from TD Cohen. Please go ahead.

Matilde (Quarters Call Operator): The next question comes from the line of Brendan Smith from TD Cowen. Please go ahead.

Speaker #6: Great, thanks guys for taking the question. I wanted to actually ask a bit more about the DNPD segment. I I understand some of the spending uncertainty from pharma, you know, makes sense given everything going on.

Michael Ryskin: Great. Thanks, guys, for taking the question. I wanted to actually ask a bit more about the DNPD segment. I understand some of the spending uncertainty from pharma, makes sense given everything going on. I am actually wondering if you can speak just a bit more to what you are hearing in conversations there, and even broad strokes, what some of the trends are in driving those decisions. I guess, does it seem to you that customers are shifting spend toward lower-risk indications or away from high-risk innovation? Just kind of wondering if there is anything consistent there to help us understand what could turn that around in the coming months.

Speaker #6: I'm actually wondering if you can speak just a bit more to what you're hearing in conversations there, and even broad strokes, you know, what some of the trends are in driving those decisions.

Speaker #6: I guess, does it seem to you that, you know, customers are shifting spend toward lower risk indications, or away from high-risk innovation, just kind of wondering if there's anything consistent there to help us understand what could turn that around in the coming months?

Speaker #4: Did you say large pharma or biotech, sorry?

Paul Hitchin: Did you say large pharma or biotech? Sorry.

Speaker #6: both, if you're able to provide it.

Michael Ryskin: Both, if you are able to provide it.

Speaker #4: Well, it's probably not a secret that, right now, our biotech is pretty much down, especially when you think about U.S. biotech and particularly East Coast U.S., where there's a lot of business.

Christian Wojczewski: Well, it's probably not a secret that right now, biotech is pretty much down, especially when you think about US biotech and particularly East Coast US where there's a lot of business. That has been going on since quite a while. I think we've been all talking quarter by quarter about the tipping point. We don't see this. We've actually provided you today with a little bit of data and statistics to underpin maybe what has been a bit more anecdotal in the last couple of calls. Those two match. What we see in the funding profile is that the early-stage biotech is currently not yet spending the same amount of money that it has been, clearly not during the pandemic but also not before the pandemic, seems to be a fact.

Paul Hitchin: Well, it's probably not a secret that right now, biotech is pretty much down, especially when you think about U.S. biotech and particularly East Coast U.S., where there's a lot of business. That has been going on since quite a while, and I think we've been all talking quarter by quarter about the tipping point. We don't see this. We've actually provided you today with a little bit of data and statistics to underpin, maybe what has been a bit more anecdotal in the last couple of calls, but those two match. What we see in the funding profile is that, the early-stage biotech is currently not yet spending the same amount of money that it has been, clearly not during the pandemic, but also not before the pandemic. It seems to be a fact, but it's also anecdotally, what we hear from our customers. Much more cautious, decision behavior.

Speaker #4: So, that has been going on since quite a while, and I think we've been all talking quarter by quarter about the tipping point. we don't see this.

Speaker #4: We've actually provided you today with a little bit of data and statistics to underpin maybe what has been a bit more anecdotal in the last couple of calls.

Speaker #4: But those two match. So what we see in the funding profile, that, the, the early-stage biotech is currently not yet spending the same amount of money that it has been clearly not during the pandemic, but also not before the pandemic.

Speaker #4: It seems to be a fact, but it's also anecdotally what we hear from our customers. There is much more cautious decision behavior. And frankly, we also see that in academics because, as you probably know, we've got an arm which we call Bridge, where we are helping small businesses that come from universities to connect with pharma companies. We basically do the work for them in early research.

Operator: It's also anecdotally what we hear from our customers: much more cautious decision behavior. Frankly, we also see that in academics because, as you probably know, we've got an arm which we call Bridge where we are helping small businesses that come from universities to connect with pharma companies where we basically do the work for them in early research. It's the same pattern here. Much more careful decision-making and spending. When you go to pharma, I think it's not such that you basically have one story to tell. It's much less homogeneous. Every company is in a different stage of its life cycle. We have partners and customers who are restructuring. We've got others who are forcefully looking into new indications and new target identifications. That picture is a bit more mixed. I hope that helps a little. Okay. Gotcha. Yep. Yep. Understood. Thanks.

Paul Hitchin: Frankly, we also see that in academics, because, as you probably, know, we've got an arm which we call Bridge, where we are helping small businesses that come from universities, to connect with pharma companies, where we basically do the work for them in early research. It's the same pattern here. Much more careful, decision-making and spending. When you go to pharma, I think it's not such that you basically have one story to tell. It's not much less homogeneous. Every company is in a different stage of its life cycle. We have partners and customers who are restructuring. We've got others who are forcefully looking into new indications and new target identifications. So that picture is a bit more mixed. I hope that helps a little bit.

Speaker #4: It's the same pattern here. Much more careful, decision-making and spending. when you go to pharma, I think it's, it's not such that you basically have one story to tell.

Speaker #4: It's not much less homogeneous, every company is in a different stage of its life cycle, we have partners and customers who are restructuring, we've got others who are, forcefully looking into new indications, and new, target identification.

Speaker #4: So that picture is a bit more, more mixed. I hope that helps a little bit.

Speaker #6: Okay, gotcha. Yeah, yep, understood, thanks. And then if I, if I could just really quickly, as actually, as it relates to, your AI capabilities, I know you spoke a little bit to some of the proprietary data sets you've got.

Michael Ryskin: Okay. Gotcha. Yeah. Understood. Thanks. If I could just really quickly add, actually, as it relates to your AI capabilities, I know you spoke a little bit to some of the proprietary datasets you have. I am actually just wondering if there has been any renewed interest in leveraging this either internally or from your partners, just kind of given FDA's recent push towards more of these computational modeling technologies. I am just trying to understand maybe your strategy or applications and how it has evolved recently.

Brendan Smith: Then if I could just really quickly, actually, as it relates to your AI capabilities, I know you spoke a little bit to some of the proprietary data sets you've got. I'm actually just wondering if there's been any renewed interest in leveraging this either internally or from your partners, just kind of given FDA's recent push towards more of these computational modeling technologies. I'm just trying to understand maybe your strategy or applications and how it's evolved recently. Thanks. Absolutely. Thanks for the question. An important topic for us. I hand this over to Cord. Yeah. Thank you for the question.

Speaker #6: I'm actually just wondering if there's been any renewed interest in leveraging this, either internally or from your partners, just kind of given FDA's recent push towards more of these competition modeling technologies.

Speaker #6: I'm just trying to understand maybe your strategy or applications, and how it's evolved recently.

Speaker #4: Absolutely, and thanks for the question, and important topic for us. I hand this over to Court.

Paul Hitchin: Absolutely. Thanks for the question and important topic for us. I hand this over to Cord. Thank you for the question. Generally, I would say you can definitely feel that there is a generally heightened interest in incorporating and including AI machine learning technologies and tools into the drug discovery process. This means that this is not only in regards to safety assessments, largely what the FDA is alluding to, but also in the early stages, target ID validation, and in particular, of course, also in the drug design process, when it comes to really designing new molecules and optimizing them for further development. We do not, I would say, at this point in time, really see that there is a particular, very hard push on the front of safety profiling because there is still a lack of data to support, especially safety predictions properly in a bunch of areas.

Speaker #7: Yeah, thank you for the question. So generally, I would say you can definitely feel that there is a generally heightened interest in incorporating and including AI and machine learning technologies and tools into the drug discovery process.

Cord Dohrmann: Generally, I would say you can definitely feel that there is generally heightened interest in incorporating and including AI machine learning technologies and tools into the drug discovery process, which means that this is not only sort of in regards to safety assessments, largely what the FDA is alluding to, but also in the early stages of target ID validation and, in particular, of course, also in the drug design process when it comes to really designing new molecules and optimizing them for further development. I would say at this point in time, we don't really see sort of that there is a particular very hard push on the front of safety profiling because there's still sort of a lack of data to support especially safety predictions properly in a bunch of areas.

Speaker #7: which, is, which means that this is not only sort of in regards to safety assessments, largely what the FDA is alluding to, but also in in the early stages, target ID validation in particular, of course, also in the drug design process, when it comes to really designing new molecules and, and, optimizing them for further development.

Speaker #7: So, we don't, I would say at this point in time, we don't really see sort of that. There is a particular, very hard push on the front of safety profiling, because there's still sort of a lack of data to support, especially safety predictions properly in a bunch of areas.

Speaker #7: But, we do see efforts of, companies trying to fill this void by generating large, amounts of data, to build these predictive tools. And, once again here, Evotec is, really well positioned through our, platform that, is especially, geared towards omics-driven drug discovery, omics is sort of more the, essentially the quantification of biology, and, so we feel well positioned for this, not just through the omics arm, but also through our own capabilities, in terms of building, superior assay systems, IPSC-based, etc., but also our own tools that we are developing in-house.

Operator: We do see efforts of companies trying to fill this void by generating large amounts of data to build these predictive tools. Once again, here, Evotec is really well positioned through our platform that is especially geared towards omics-driven drug discovery. Omics is sort of more essentially the quantification of biology. We feel well positioned for this, not just through the omics arm, but also through our own capabilities in terms of building superior assay systems, IPSC-based, etc., but also our own tools that we are developing in-house. Thanks, Cord. By the way, I should mention we don't talk too much about it. The computational chemistry is obviously, since long, an important component of our business anyway. It's happening. It's not something fancy in the future. Got it. Thank you very much.

Paul Hitchin: We do see efforts of companies trying to fill this void by generating large amounts of data to build these predictive tools. Once again here, Evotec is really well positioned through our platform that is especially geared towards omics-driven drug discovery. Omics is essentially the quantification of biology. So we feel well positioned for this, not just through the omics arm, but also through our own capabilities, in terms of building superior assay systems, iPSC-based, etc., but also our own tools that we are developing in-house. Thanks, Cord.

Speaker #7: Thanks, Court, and.

Speaker #6: Appreciate it.

Michael Ryskin: Appreciate it.

Speaker #4: By the way, I should mention we don't talk too much about it, but computational chemistry is obviously, for a long time, an important component of our business anyway.

Paul Hitchin: By the way, I should mention we do not talk too much about it, but the computational chemistry is obviously, since long, an important component of our business anyway. It is happening. It is not like something fancy in the future.

Speaker #4: so, it's happening, it's, it's, it's not, like something, fancy in the future.

Speaker #6: Got it, thank you very much.

Michael Ryskin: Got it. Thank you very much.

Speaker #5: We now have a question from the line of Michael Riskin from Bank of America. Please go ahead.

Operator: We now have a question from the line of Michael Ryskin from Bank of America. Please go ahead. Great. Thanks for taking the question. I was wondering if you could comment on the pricing environment you are seeing among your customers. Are they becoming more price-sensitive? Is there increasing competition just given the softer demand environment? I imagine more CROs and research partners are competing for some of the same bids and proposals. Thank you, Michael. As I mentioned already during the last call, we have to disaggregate a little bit the business here. Obviously, there is a portion that is more transactional, standalone services. There is another portion of our business where we have integrated deals and long-term strategic partnerships. As you probably will appreciate, the latter part is less of a price conversation here. It is about the value that we bring to the partner through our platforms.

Matilde (Quarters Call Operator): We now have a question from the line of Michael Ryskin from Bank of America. Please go ahead.

Speaker #6: Great, thanks for taking the question. I was wondering if you could comment on the pricing environment you’re seeing among your customers. Are they becoming more price sensitive?

Michael Ryskin: Great. Thanks for taking the question. I was wondering if you could comment on the pricing environment you are seeing among your customers. Are they becoming more price-sensitive? Is there increasing competition just given the softer demand environment? I imagine more CROs and research partners are competing for some of the same bids and proposals.

Speaker #6: Is there an increasing competition, just given the, softer demand environment? you know, I imagine, more, more CROs, and research partners are, competing for some of the same bids and, proposals.

Speaker #4: Thank you, Michael, and, as I mentioned already, during the last call, we have to disaggregate a little bit the business here. Obviously, there's a portion that is more transactional, standalone services.

Paul Hitchin: Thank you, Michael. As I mentioned already during the last call, we have to desegregate a little bit the business here. Obviously, there is a portion that is more transactional, standalone services. There is another portion of our business where we have integrated deals and long-term strategic partnerships. As you probably will appreciate, the latter part is less of a price conversation here. It is about the value that we bring to the partner through our platform. Given that there is a lot of IP and also technology leadership around this, it is hard to compete because it is not a service that you put on the shelf of a supermarket. On the more transactional side, obviously,

Speaker #4: There's another portion of our business where we have integrated deals and, and, and long-term strategic partnerships. As you probably will appreciate, the latter part is, is less of a price conversation here.

Speaker #4: It's about the value that we bring to the partner through our platforms. And given that there's a lot of IP and, and also, technology leadership around this, it's in a hard to compete because it's not a service that you put on the shelf of a supermarket.

Operator: Given that there's a lot of IP and also technology leadership around this, it's hard to compete because it's not a service that you put on the shelf of a supermarket. In the more transactional side, obviously, in an environment where the market is more soft, it would be inappropriate to state that this is not happening. We do see that price negotiations are different than it had been maybe 2 years ago. As I said earlier, the exposure probably on our side compared to CRO players who are 100% in that segment is a bit less. Okay. Okay.

Speaker #4: And the more transactional side, obviously, in an environment, where, the market is more soft, it would be, inappropriate to state that this is not happening.

Christian Wojczewski: In an environment where the market is more soft, it would be inappropriate to say that this is not happening. We do see that price negotiations are different than it had been maybe two years ago. But as I said earlier, the exposure probably on our side compared to CRO players who are 100% in that segment is a bit less.

Speaker #4: We do see that price negotiations are different than they had been maybe two years ago. But, as I said earlier, the exposure probably on our side compared to CO players who are 100% in that segment is a bit less.

Speaker #6: Okay. Okay. and I was wondering if you could comment a little bit on, geographic, if you're seeing any different, from, your partners and customers in Europe, versus the US, versus, Asian Pacific, if there's some parts of the world that are, a little bit more cautious, or maybe a little bit further along in the recovery path.

Matilde (Quarters Call Operator): Okay. Okay. I was wondering if you could comment a little bit on geographic, if you are seeing anything different from your partners and customers in Europe versus the U.S. versus Asian Pacific, if there are some parts of the world that are a little bit more cautious or maybe a little bit further along in the recovery path. Thanks.

Michael Ryskin: I was wondering if you could comment a little bit on geographic, if you're seeing anything different from your partners and customers in Europe versus the US versus Asia Pacific, if there's some parts of the world that are a little bit more cautious or maybe a little bit further along in the recovery path. Thanks. I think it's fair to say that right now, there is still a lot of traction in the market in the East, Asia, China, as opposed to, I would say, the other extreme, which is probably US, Europe in the middle somewhere, broad picture. Yes, geographically, there is different behavior, different market dynamics right now. Our exposure, as you know, is geared towards Europe and US and will probably right now not benefiting from the trends that we see in China.

Speaker #6: Thanks.

Christian Wojczewski: I think it is fair to say that right now there is still a lot of traction in the market in East Asia, China, as opposed to, I would say, the other extreme, which is probably U.S., Europe in the middle somewhere, broad picture. Yes, geographically, there is different behavior, different market dynamics right now. Our exposure, as you know, is geared towards Europe and U.S., and we are probably right now not benefiting from the trends that we see in China. We also believe that if the market is actually returning, that we should then over proportionately benefit from the geographic recovery.

Michael Ryskin: We also believe, if the market is actually returning, that we should then overproportionately benefit from the geographic recovery. Okay. Thank you. The next question comes from the line of Falko Schindler from Deutsche Bank. Please go ahead. Yes. Hi. Thanks for taking my questions. I have a couple of questions on the JEB business. I understand you cannot speak about the deal specifically. Maybe you can help us understand the mix of the JEB business as it stands now. How much of the revenue in this segment is drug production in your own J.PODs at the moment versus actually already high-margin licensing revenue? You spoke about the high growth with non-Sandoz customers. Can we assume this is mostly licensing revenue, or is this potentially production revenue in the Redmond side?

Matilde (Quarters Call Operator): Okay. Thank you.

Paul Hitchin: Der nächste Frage kommt von der Line of Finn Schertler von Deutsche Bank. Please go ahead.

Matilde (Quarters Call Operator): Yes, hi, and thanks for taking my questions. I have a couple of questions on the Just - Evotec Biologics business. I understand you cannot speak about the deal specifically, but maybe you can help us understand the mix of the Just - Evotec Biologics business as it stands now. How much of the revenue in the segment is drug production in your own Just - Evotec Biologics facilities at the moment versus actually already high-margin licensing revenue? You spoke about the high growth with non-Sandoz customers. Can we assume this is mostly licensing revenue, or is this potentially production revenue in the Redmond side? I would have actually thought that the Sandoz ramp-up would by now be the majority of the growth. Will this be more meaningful in the second half of the year, or how should we think about the Sandoz ramp-up contribution for this year?

Christian Wojczewski: I would have actually thought that the Sandoz ramp-up would by now be the majority of the growth. Will this be more meaningful in H2 of the year, or how should we think about the Sandoz ramp-up contribution for this year? Sorry, just the last confirmation. For the J.POD, I think the Toulouse one, you had indicated in the past that the revenue number when it would be fully utilized would probably be around EUR 300 million or around the capex that you spend for it, if you could just confirm that for us. Thank you. Thanks, Finn. On the mix, the question around drug product versus licensing, the deals that we do are not today like you either buy license or you buy the product. It's a package today. That's also how we do our contracts and deals.

And I would have actually thought that um, the Thunder ramp up would by now be the majority of the growth.

Matilde (Quarters Call Operator): Just the last confirmation: For the Just - Evotec Biologics, I think the Toulouse one, you had indicated in the past that the revenue number when it would be fully utilized would probably be around $300 million or around the CapEx that you spend for it, if you could just confirm that for us. Thank you.

Will this be more meaningful in the second half of the year or how should we think about the sandal wrap-up contribution for this year?

And I'm sorry, just the last confirmation um for the jpod. I think the to lose 1 you had indicated in the past that the revenue number when it would be fully utilized would probably be around 300 million or around the capex that you spend for it. If you could just confirm that for us, thank you.

Christian Wojczewski: Thanks, Finn. On the mix, the question around drug product versus licensing, the deals that we do are not today like, you know, you either buy a license or you buy the product. It is a package today. That is also how we do our contracts and deals. You get the access to the license through the contracts that we have with our partners. As part of that, there is development, and where needed, also production. We are not splitting this out. Right now, there is not a product line for tech licensing and a product line for the product as such. I guess what you have heard me saying is that we want to give more weight into the individual components going forward. That is the right thing to do because we believe we can sell both as an integrated offer. We can sell it both as a standalone.

Thanks sin, uh, on the the mix, uh the question around clock products.

This is licensing. Uh,

The.

Deals that we do are not today like you know, you either buy license or you buy the product.

Uh, it's a

Operator: You get the access to the license through the contracts that we have with our partners. As part of that, there is development and, where needed, also production. We are not splitting this out. Right now, there is not a product line for tech licensing and a product line for the product as such. I guess what you have heard me saying is that we want to give more weight into the individual components going forward. That is the right thing to do because we believe we can sell both as an integrated offer. We can sell it both as a standalone. We have not fully explored it in the past. I cannot give you a number. There will be more emphasis going forward on the individual parts. With regard to the number piece, Paul, do you want to? Yeah.

it's a package today and that's also how we do our contracts and Deals. So you you get the access to the license through uh,

the um,

The contracts that we have with our partners. And as part of that, they is development.

and we needed also, um,

Uh production. So we're not splitting this out. Uh so right now there is not a product line for Tech licensing and a product line.

For for the perk as such I guess. Um what you've heard me saying is that we want to give more weight into the individual components going forward, and that's the right thing to do. Because we believe,

Christian Wojczewski: We have not fully exploited it in the past. I cannot give you a number. There will be more emphasis going forward on the individual parts. With regard to the number piece, Paul, do you want to?

Uh, we can sell both as an integrated offer. We can sell it both as a standalone.

Um but we have not fully explored it in the past so I can't give you a number.

Um, but there will be more emphasis going forward on the individual parts.

Cord Dohrmann: Yeah, just a couple of thoughts there, Finn. As Christian said, in terms of the mix existing package today, we are looking to monetize our assets fully. We see an improving mix as we look forward for the business. When you think about the non-Sandoz customers and the growth that we have seen in the first half, I think it is better to assume that there is that is predominantly development and production revenue versus a sizable license element at this point in time. As I look out, as your question pertains to my comments on Sandoz in the first half, as you know, we have some level of variability with each of our customers as we progress milestones. I would expect the same going forward as part of our normal business.

Paul Hitchin: Just a couple of follow-ups there, Falko. As Christian said, in terms of the mix, existing package today, we're looking to monetize our assets fully. We see an improving mix as we look forward for the business. When you think about the non-Sandoz customers and the growth that we've seen in the H1, I think it's fair to assume that that is predominantly development and production revenue versus a sizable license element at this point in time. As I look out, as your question pertains to kind of my comments on Sandoz's in the H1, well, as you know, we have some level of variability with each of our customers as we progress milestones. I would expect the same going forward as part of our normal business. Okay. Great.

Yeah. Um, just a couple of follow-ups there Finn. So she does Christian said, in terms of the mix existing package today. Um we're looking to monetize our assets fully so you know, um we see an improving mix uh as we look forward for the business.

Um, when you think about the nonsense, uh, customers, and, uh, the growth that we've seen in the first half, I think it's fair to assume that there's that is predominantly. Um, um, development and production, uh, uh, Revenue, uh, versus a, uh,

A sizable license element at this point in time.

Um, and then, as I look out, um, as your questioner, pertains to kind of my comments on Sandoz in the first half. Well, as you know, um, we have some level of, uh, variability with each of our customers as we progress milestones and I would expect the same, uh, going forward as part of our normal business.

Matilde (Quarters Call Operator): Okay, great. On the $300 million CapEx for the JPOT, could you confirm that this is roughly the size of revenue that we should think about for the asset?

Falko Schindler: Sorry, on the EUR 300 million capex for the J.POD, could you confirm that this is roughly the size of revenue that we should think about for the asset? Yeah. What I would say is when we think about the consideration that we've got for the site, based on current book value, we would expect that to exceed current book value. Thank you very much. Thank you. We now have a question from the line of Christian Ehmann from Warburg Research. Please go ahead. Hello, everyone. Thanks for taking my question. I'm trying to piggyback on my previous colleague's question. Could you help us understand the rationale to now consider a sale of the J.POD 2 in Toulouse at this point in time, just before or at least once you've finished building up the asset and then considering a sale?

Okay, great and sorry on the the 300 million capex for the jpad. Um, could you confirm that this is roughly, the the size of Revenue that we should think about for the effort.

Cord Dohrmann: What I would say is when we think about the consideration that we have got for the site, based on current book value, we would expect that to exceed current book value.

yeah, what I would say is, um, when we think about the consideration that we've got for the site, you know, um, based on current Book value, you would expect that to exceed current Book value

Matilde (Quarters Call Operator): Thank you very much.

Cord Dohrmann: Thank you.

Thank you very much. Thank you.

Paul Hitchin: We now have a question from the line of Christian Ehmann from Warburg Research. Please go ahead.

We now have a question from the line of Christian Eman from vaba research. Please go ahead.

Charles Weston: Hello everyone, and thanks for taking my question. I am trying to piggyback on my previous colleague's question. Could you help us understand the rationale to now consider a sale of the JPOT in Toulouse at this moment in time? Just before, or at least once you finish building up the asset and then considering a sale, I would really like to get a sense of what the more detailed, let us say, rationale is for the sale. Thank you.

Christian Wojczewski: I would really like to get a sense what the more detailed, let's say, rationale is for the sale. Thank you. Thanks, Christian, for the question. Apologies if I maybe repeat a couple of messages here. It's just exactly following our strategy. We've reviewed where we want Just to be in the future. We've communicated this in April. We're now executing. It is exactly the right timing. There's actually not much more to say about it. Thank you. The next question comes from the line of Joseph Hedden from Rx Securities. Please go ahead. Good afternoon. Thanks for taking my questions. Just interested to dig in a little on your efforts on enhancing the D&PD offering for kidney diseases and perhaps some metrics. It'd be helpful to understand what proportion of current revenues come from projects in the kidney disease space.

Christian Wojczewski: Thanks, Christian, for the question. Apologies if I need to repeat a couple of messages here, but it is just exactly following our strategy. We have reviewed where we want Just - Evotec Biologics to be in the future. We have communicated this in April, and we are now executing. It is exactly the right timing. There is actually not much more to say about it.

Hello everyone, and thanks for taking my question. Um, I'm trying to piggy back on my previous colleagues questions. So could you help us understand the rationale to now consider a sale of the jport 2 into loose? Um, at this moment in time. So just before, uh, or at least once you've finished building up on the asset and then considering a sale, um, I would really like to get a sense, what the more detailed. Um, let's say rationale is for the sale. Thank you.

thanks Christian for the question and um,

uh, apologies if I maybe repeat a couple of messages here, but

Uh it's just exactly falling our strategy. Uh We've uh reviewed um where we want just to be in the future with communicated this in April uh and we're now executing so uh it

It is exactly the right timing. Um, and um, it's actually not much more to say about that.

Charles Weston: Thank you.

Thank you.

Paul Hitchin: The next question comes from the line of Joseph Hedden from RX Securities. Please go ahead.

The next question comes from the line of Joseph hen from RX Securities. Please go ahead.

Michael Ryskin: Good afternoon, and thanks for taking my questions. I am just interested to dig in a little on your efforts on enhancing the DNPD offering for kidney diseases and perhaps some metrics. It would be helpful to understand what proportion of current revenues come from projects in the kidney disease space, and where do you expect that to be around the time of your midterm outlook in 2028? Thank you.

Good afternoon, and thanks for taking my questions. Um, just interested to dig in a little on your efforts, on enhancing the DP and the offering for kidney diseases um and and perhaps from metrics, so

It'd be helpful to understand what proportion of current revenues come from.

Christian Wojczewski: Where do you expect that to be around the time of your midterm outlook in 2028? Thank you. Thanks a lot. This goes straight to Cord Dohrmann as well. A core piece or let me start this way. We believe that Evotec that really very important decisions in the drug discovery process are, of course, made in the pre-clinic. One of the most important decisions you can make here is to identify a target that you believe is relevant for a particular disease progression in patients. This is a field that is gaining more and more traction and interest all over the industry, I would say, with the event of omics technologies. Here I'm meaning not just genome analysis or genome sequencing but, in particular, the profiling of disease-relevant tissues down to single-cell resolution level.

Cord Dohrmann: Thanks a lot. Let us go straight to the core as well. A core piece, or let me start this way. We believe that Evotec, that really very important decisions in the drug discovery process are, of course, made in the preclinical. One of the most important decisions you can make here is to identify a target that you believe is relevant for a particular disease precaution in patients. This is a field that is gaining more and more traction and interest all over the industry, I would say, with the advent of omics technologies. Here, I am meaning not just genome analysis or genome sequencing, but in particular, the profiling of disease-relevant tissues down to single-cell resolution level.

Uh, projects in the kidney disease space and where do you expect that to be around the time of your midterm Outlook in 2028? Thank you.

Thanks a lot. Just go straight to court as well.

Um, so um a um, a core piece or or let's let let me start this way. Uh, we believe that you protected, uh, really very important decisions in the doctors covering process of course, made in the free clinic and 1 of the most important decisions you can make, uh, here is to identify a Target that you believe is relevant for, uh, a particular disease to these progression, uh, in patients. And, uh, this, um, this is a field that, um, is gaining more and more traction and interest

Cord Dohrmann: In particular, using transcriptomics allows us to have a deeper view into disease-relevant mechanisms that are driving disease processes and thereby identifying novel targets that have the potential to very significantly interfere with disease progression in patients and have a disease modification effect, maybe even leading up to a cure. We continue to invest into this field. We have shown in the past that through our investments into the deep profiling of kidney disease patients, that we were able to strike very interesting partnerships in chronic kidney diseases with really top-notch pharma partners such as Bayer, such as Lilly, Novo Nordisk, Novartis, etc. We continuously keep following the strategy now to go beyond chronic kidney diseases, most recently into acute kidney injury, but as we have announced last year also in obesity and IMID, essentially. This is a continuous strategy. We intend to follow this going forward.

Cord Dohrmann: In particular, using transcriptomics allows us to have a deeper view into disease-relevant mechanisms that are driving disease processes and thereby identifying novel targets that have the potential to very significantly interfere with the disease progression in patients and have a disease modification effect, maybe even leading up to a cure. We continue to invest into this field. We have shown in the past that through our investments into the deep profiling of kidney disease patients that we were able to strike very interesting partnerships in chronic kidney diseases with really top-notch pharma partners such as Bayer AG, such as Lilly, Novo Nordisk, etc. We continuously keep following the strategy now to go beyond chronic kidney diseases, most recently into acute kidney injury, but as we have announced last year, also in obesity and INI, essentially. This is a continuous strategy, and we intend to follow this going forward.

And have a disease modification affect maybe even leading up to a cure.

So we continue to invest into this, uh, field. We have shown in the past that, uh, through our investments into, uh, the, uh, deep profiling of kidney disease patients that we were able to strike very interesting Partnerships, uh, in, chronic kidney diseases with really, uh, top-notch, uh, uh, Pharma Partners such as Bayer, such as Lily, Noble, novardis, Etc.

Operator: We believe that these insights in the molecular disease mechanisms will not only be helpful in identifying targets, but they will be extremely helpful also in tracking the profiles of drug candidates through the pre-clinic and even into the clinic. The most advanced molecule we currently have out of these efforts is currently in phase I together with Bayer. We are very excited about this program. We believe this program will be moving forward in the future. There will be many more to come and follow this path. Generally, we feel that this is a very high-value strategy for Evotec. It really speaks to the strength of Evotec in running integrated drug discovery programs as real partners in the pharmaceutical industry. Based on this, we want to continue. This involves, of course, AI-driven drug discovery. It involves NARMS.

Cord Dohrmann: We believe that these insights will not, in the molecular disease mechanisms, will not only be helpful in identifying targets, but they will be extremely helpful also in tracking the profiles of drug candidates through the preclinical and even into the clinic. The most advanced molecule we currently have out of these efforts is currently in Phase 1 together with Bayer AG. We are very excited about this program. We believe this program will be moving forward in the future. There will be many more to come and follow this path. Generally, we feel that this is a very high-value strategy for Evotec SE. It really speaks to the strength of Evotec SE in running integrated drug discovery programs as we are partners in the pharmaceutical industry. Based on this, we want to continue, and this involves, of course, AI-driven drug discovery. It involves NAMs.

Uh, and uh, we continuously keep following the strategy. Now to go beyond, chronic kidney diseases, most recently into acute kidney injury. But, uh, as we have announced the last year also in obesity and and I and I essentially, so this is a continuous strategy and it, uh, uh, we, we intend to follow this going forward. And, uh, uh, we believe that these insights, um,

Will not, um, in the doctor in, in molecular disease mechanisms, will not only be helpful in identifying targets, but they will be extremely helpful. Also in tracking, uh, the profiles of, uh, drug candidates, uh, through the pre pre clinic and even into the clinic. Um, so the, the the most advanced

Molecule that we currently have out of these efforts uh is currently in Phase 1 together with Bayer. And uh um we we are very excited about this program. We believe this program will will be going moving forward in the future. Um and there will be many more to come and follow this path.

Joseph Hedden: It involves all of these components that we can bring to bear on these programs. I hope that helps a little bit. Okay. Thanks. Yes. Thanks, Cord. Perhaps if I could just have one more related to the questions and comments that we've already had on Just and specifically the broadening of the customer base. I'm just interested, what types of customers are you seeing? Are these foundations, biotech, large pharma? Are these all development work packages that you previously spoke of or some perhaps a bit closer to commercial stage? Any color there to help? Thank you. Yeah. All sorts of from small to big. I think we also said that majority or big chunk of the growth that we've seen in the H1 has actually arrived from three large pharma companies.

Cord Dohrmann: It involves all of these components that we can bring to bear on these programs. I hope that helps a little bit.

So generally, we feel that this is a very, um, high value strategy for evotech. It really speaks to the strength of evotech and running integrated drug Discovery programs as as real Partners, um, uh, in the pharmaceutical industry. And, uh, based on this, uh, we we want to continue and this, uh, involves of course, AI driven drug Discovery, it involves, uh, numbs, it involves all of these components that we can bring to bear on these programs.

I hope that helps a little bit. Okay, thanks, bye.

Michael Ryskin: Yes, thanks. Yes, thanks, Claude. Perhaps if I could just have one more related to the questions and the comments that we have already had on Just - Evotec Biologics and specifically the broadening of the customer base. I am just interested, what types of customers are you seeing? Are these foundations, biotechs, large pharma? Are these all development work packages that you previously spoke of, or are some perhaps a bit closer to commercial stage? Any color there to help? Thank you.

Yes, thank thanks cord. Um, and perhaps see if I could just have 1 more, um, related to the questions and comments that we've already had on on just, um, and specifically, the broadening of the customer base. Um, just interested what types of customers you seeing with these foundations, by text, large lava, um, and these all development work packages, um, that you've previously spoke of or some perhaps a bit closer to commercial stage, any color that have helped.

Thank you.

Christian Wojczewski: Yeah, so all sorts of from small to big. I think you also said that the majority or a big chunk of the growth that we have seen in the first half has actually arrived from three large pharma companies. So you actually see that it is cutting across the whole chain from biotech to pharma. Given the current nature, this is not late-stage clinical. It is earlier.

yeah, so uh, all sorts of from small to big and I think, uh,

We also set that.

Joseph Hedden: You actually see that it is cutting across the whole chain from biotech to pharma. Given the current nature, this is not late-stage clinical. It's earlier. Okay. Thank you, Christian. We now have a question from the line of David Floren from DSF Capital. Please go ahead. Hey, guys. Good morning.

A majority, or a big chunk, of the growth that we've seen in the first half actually arrived from three large pharma companies. So, you can see that it is...

It is, uh, cutting across the whole chain from biotech to farmer.

Um,

given the current nature. Uh, this is not late stage clinical its earlier.

Michael Ryskin: Okay. Thank you, Christian.

Okay, thank you. Christian.

Paul Hitchin: We now have a question from the line of David Floren from DSF Capital. Please go ahead.

We now have a question from the line of David Florin from DSS Capital. Please go ahead.

David Floren: Hey, guys. Good morning. I wanted to ask or just say it is good to hear, Christian, that you mentioned that you are negotiating this deal from a position of strength because it does feel like selling your crown asset near cost and selling and presumably most of your backlog alongside of that. I know you guys are not commenting on it, but I really do hope that, from your position of strength, the tail economics, the milestone, the royalties are not just going to be IRR positive, but are also going to be close to NPV positive because you have already made this big investment. The balance sheet is not in bad shape, and you have done almost all the hard work here. So are you also thinking about it from an NPV basis?

David Floren: Hey, I wanted to ask or just say, it's good to hear, Christian, that you mentioned that you're negotiating this deal from a position of strength because it does feel like selling your crown asset near cost and selling and presumably most of your backlog alongside of that. I know you guys aren't commenting on it, I really do hope that from your position of strength, that the tail economics, the milestone, the royalties are not just going to be IRR positive but are also going to be close to NPV positive because you've already made this big investment. The balance sheet's not in bad shape. You've done almost all the hard work here. Are you also thinking about it from an NPV basis? David, if that's a question, we can say yes to it. All right. All right. Great. Great. That's great.

Hey guys. Good morning.

Hey, I, I wanted to ask uh, or or just say it's good to hear Christian that you mentioned that you're negotiating. This deal from a position of strength.

Because it it does feel like selling your crown asset near cost.

And selling, uh, and presumably most of your backlog alongside of that.

Uh, you know, I I know you guys aren't commenting on it, but I really do hope that, uh, you know, from your position of strength that the tail economics. The, you know, the Milestone, the royalties are not just going to be irritable, but are also going to be close to npv positive.

Because you've already made this big investment. The balance sheet is not in bad shape. And uh, you've done almost all the hard work here.

Christian Wojczewski: David, if that is a question, we can say yes to it.

So are you also thinking about it from an NPV basis?

if it if that's a question, we can say yes to

David Floren: All right. All right. Great. Great. That's great. This big pivot in strategy, it seems like the most attractive components of Just - Evotec Biologics outside of the technological advances are you guys can do the small batches, which positions yourself well to do a lot of FIH work. Hopefully, I thought the strategy was always lock up these biotechs, hopefully some pharmas early in the program because once these programs start moving through towards commercial launch, the switching costs are way too high. You basically, once you have them early, as long as they're successful, you have them for life. This seems like this pivot, it's unclear to me, if you are kind of maybe not ostracizing, but making it more difficult to get biotech partnerships simply because they do not want to, most of them are fairly cash strapped.

David Floren: This big pivot in strategy, it seems like the most attractive components of Just outside of the technological advances are you guys can do the small batches, which lends yourself or positions yourself well to do a lot of FIH work. Hopefully, I thought the strategy was always lock up these biotechs, hopefully some pharmas early in the program because once these programs start moving through towards commercial launch, the switching costs are way too high. You basically, once you have them early, as long as they're successful, you have them for life. This seems like this pivot, it's unclear to me if you're kind of maybe not ostracizing but making it more difficult to get biotech partnerships simply because they don't want to most of them are fairly cash-strapped. They don't want to commit a ton of capital towards building out manufacturing capacity.

All right, all right, great great, that's great. And then this big pivot and strategy um

Uh, outside of, uh, you know, the technological advances, are you guys able to do the small batches, which lends yourselves, uh, or positions yourselves well to do a lot of fih?

Work and hopefully, uh, you know, I thought the strategy was always, you know, lock up these biotechs. Hopefully some farmers, uh, early in the program. Because once, uh, these, uh, programs start moving through towards commercial launch, uh, the switching costs are way too high.

Uh and and so, you know, you basically, once you have them early, as long as they're successful, you have them for life.

Um, but this seems like, you know, this this pivot it's unclear to me like if you're if you're kind of maybe not ostracizing but making it more difficult to get biotech.

Partnerships.

David Floren: They do not want to commit a ton of capital towards building a manufacturing capacity. If you are trying to sign up with them later or get them to commit to your asset-light strategy, it will be too late in their development progress, and they are not going to want to switch to you later on. I am just curious if this asset-light model really only works with generics and large pharma, and if there is a pivot away from trying to lock up a lot of early-stage biotech as well.

Christian Wojczewski: If you're trying to sign up with them later or get them to commit to your asset-light strategy, it'll be too late in their development progress. They're not going to want to switch to you later on. I'm just curious if this asset-light model really only works with generics and large pharma and if there's a pivot away from trying to lock up a lot of early-stage biotech as well. Thanks, David. As you probably will assume, we've thought this through well. You're right. FIH is important. It will remain important. The technology works well with complex molecules. It works well with high-density need. We know that we have excellent sweet spot for certain type of products. Obviously, the capex-light model doesn't mean that we cannot provide capacity for those biotech companies.

Simply because they don't want to, you know, most of them are fairly cash strapped. They don't want to commit a ton of capital towards uh uh building out manufacturing capacity.

Christian Wojczewski: Thanks, David. You probably will assume we have thought this through well. You are right. FIH is important, and it will remain important. The technology works well with complex molecules, and it works well with high-density need. We know that we have excellent sweet spot for certain types of products. Obviously, the CapEx light model does not mean that we cannot provide capacity for those biotech companies. Keep in mind, we have shown a picture with a large facility in the U.S., a facility where we can continue to provide manufacturing capacity to this biotech. We can expand, and we can find alternative models to provide capacity. This is definitely not a change in our strategy, and it definitely does not hamper our ability to bring also this part of the business to Evotec.

And if uh, if you're trying to sign up with them later or get them to commit uh to your afterlife strategy, you know, it'll be too late in their development progress and they're not going to want to switch to you later on. So like I, I'm just curious if this asset light model, really only works with generics and large Pharma. And if there's a pivot away from like, uh, you know, trying to lock up a lot of early stage biotech as well.

Thanks David and uh a few poverty will assume we've thought this through. Well uh, you're right. Fih is important and it will remain important. The technology works well with complex molecules and it works well with high density need. So we know that we have

Excellent. Sweet spot for certain types of products.

And uh, obviously the capex light model.

uh, doesn't mean that we cannot provide

David Floren: Keep in mind, we've shown a picture with a large facility in the US, a facility where we can continue to provide manufacturing capacity to this biotech. We can expand. We can find alternative models to provide capacity. This is definitely not a change in our strategy. It definitely does not hamper our ability to bring also this part of the business to Evotec. All right. Great. It's not keeping Redmond, which I thought had a maximum capacity of a couple trains. I didn't think you could keep growing that. I didn't know if at some point you are going to say, Hey, we're selling Toulouse. We may end up having to add another JPOD and kind of do an asset-light then asset-heavy kind of model pivot back to the asset-heavy. That's definitely not the plan. All right.

Capacity for those biotech companies, keep in mind, we've shown a picture with a large facility, uh, in the US.

um, which facility where we can continue to provide provide manufacturing capacity through these biotech

We can expand and we can find alternative models to provide capacity. So this is definitely not a change in our strategy.

and it definitely does not hamper our ability to bring also this part of the business to Evotec.

David Floren: All right, great. So it's not keeping Redmond, which I thought, you know, had a maximum capacity of a couple of trains. I didn't think you could keep growing that. I just wanted to, I didn't know if at some point you are going to say, "Hey, we're selling Toulouse, but we may end up having to add another J-Pod and kind of do, you know, an asset-light and asset-heavy kind of model pivot back to the asset-heavy.

All right, great. So, it's not, uh, keeping Redmond, which I thought, you know, I had a maximum capacity of a couple trains.

Christian Wojczewski: That's definitely not the plan.

Uh, I didn't think you could keep growing that. I just wanted. I didn't know if at some point you are going to say, hey, we're selling, we're selling to loose but we may end up having to add another jpod and and kind of do you know an asset like an asset. Have you kind of model pivot back to the asset heavy

that that's definitely not a plan.

David Floren: All right. Thanks for providing that color on the three large pharmas. My guess, and most of it being early stage, I thought one of them was going to be late stage as you have a customer running a couple of Phase 3s that you've had with POVI. It does sound nice, though, that you're getting some early stage, potentially larger scale work with three large pharmas that's driving a lot of the success currently.

David Floren: Thanks for providing that colour on the 3 large pharmas. My guess, most of it being early-stage, I thought one of them was going to be late-stage as you have a customer running a couple phase III that you've had with POVI. It does sound nice, though, that you're getting some early-stage, potentially larger-scale work with 3 large pharmas that's driving a lot of the success currently. David, a recurring topic that I unfortunately have in this call is I'd love to talk more about these customer deals. The moment our partner feels we can jointly talk about it, we will do. Unfortunately, on this topic, we're pretty much handcuffed. All right. The last thing, the booking slide that you guys have included the last few conference calls, is that going to come back? I know it's anecdotal.

All right and and thanks for providing that color on the 3 large pharmas. I thought my guess and most of it being early stage, I thought the 1 of them was going to be late stage as you have.

Uh, a customer, uh, running a couple of Phase 3s that you've had.

uh, with POV, uh,

Um but yeah. So it it does sound nice though that you're getting some some early stage.

Christian Wojczewski: David, a recurring topic that I unfortunately have on this call is I'd love to talk more about these customer deals. At the moment our partner feels we can jointly talk about it, we will do. Unfortunately, on this topic, we're pretty much handcuffed.

Uh, uh, uh, potentially larger scale work with, uh, with three large farmers, that's driving a lot of the success currently.

David, uh, the recurring, uh, topic that I unfortunately have in this course, I'd love to talk more about this customer deals.

uh, and I

uh, so uh, the moment, uh, our partner feels

David Floren: All right. The last thing of the booking slide that you guys have included the last few conference calls, is that going to come back? I know it is anecdotal, and it seems to be longer duration than it had been historically, but it was nice to see the progress in discovery bookings.

We can jointly talk about it; we will do. Uh, but unfortunately, on this topic, we're pretty much handcuffed.

All right, and and then the last thing the uh the booking slide that you guys have included the last few, uh, conference calls. Is that going to come back?

David Floren: It seems to be longer duration than it had been historically. It was nice to see the progress in discovery bookings. Are you talking about the royalty slide? No. You had a booking slide that had bookings growth by quarter in the last few slides that was showing year-over-year growth. There was some distortion from the one large contract. It's nice to see visually how bookings are progressing because I think everyone on this call is hoping to see some sort of sign in the turn-in discovery business. Thanks for the hint. It's a bit of a so we've tried to provide you with some leading indicators today when it comes to VC funding. There's a bit of time gap between the funding, the spending, and then the booking, and then the revenues. We'll have a look at it and get back on this topic.

I know it's anecdotal and it seems seems to be longer duration than it had been historically but it was nice to see the progress and Discovery. Bookings.

Christian Wojczewski: Are you talking about the royalty slide?

David Floren: They had a booking slide that had bookings growth by quarter in the last few slides that was showing year-over-year growth. There was some distortion from the one large contract, but it is nice to see visually how bookings are progressing because I think everyone on this call is hoping to see some sort of sign in the turn in discovery business.

Are you talking about the, uh, the royalty slide? No? They had a booking slide that had, uh, you know, that had bookings growth by, uh, by quarter in the last few slides that were showing year-over-year growth. And, you know, there was...

Uh, some uh, Distortion from the 1 large.

uh, contract, but it's nice to see like, uh,

Christian Wojczewski: Thanks for the hint. It is a bit of a, so we have tried to provide you with some leading indicators today when it comes to VC funding. There is a bit of time gap between the funding, the spending, and then the booking, and then the revenues. But we will have a look at it and get back on this topic. Thank you.

Uh, you know, visually how how bookings are are progressing. Because I think everyone on this call, I was hoping for a, uh, to see some sort of sign in the turn in this in Discovery business. Thanks for the hints. Uh, it's a bit of a

When it comes to VC funding.

uh, a bit of time I get between the funding the spending and then they

The booking and then the revenues.

Um, but we'll have a look at it. Uh, and, uh,

David Floren: Thank you. All right. All right. Well, thank you guys very much. Thank you. The next question comes from the line of Douglas Tsao from H.C. Wainwright & Co. Please go ahead. Hi. Good morning. Thanks for taking the question. I'm just curious. I think in the prepared remarks, you made a comment that you did see or have seen an increase in change orders and that they were mostly just driven by scientific issues. I was just wondering if you could sort of provide a little more colour on that, if there was anything thematic, and what would be driving this sort of, it sounds like, somewhat systematic increase in these change orders. Thank you. Yeah. Thanks, Douglas. That's exactly what I would like to avoid, that it becomes a message of a systematic development. We also felt that it's an important data point.

David Floren: All right. Well, thank you guys very much. Thank you.

I get back on this topic. Thank you. All right, all right. Well, thank you guys very much. Thank you.

Paul Hitchin: The next question comes from the line of Douglas Zhao from HC Wainwright. Please go ahead.

The next question comes from the line of Douglas Tau from a c win, right? Please go ahead.

Douglas Zhao: Hi, good morning. Thanks for taking the questions. I am just curious, I think in the prepared remarks, you made a comment that you did see or have seen an increase in change orders and that they were mostly just driven by scientific issues. I was just wondering if you could sort of provide a little more color on that, if there was anything thematic, and what would be driving this sort of, it sounds like, somewhat systematic increase in these change orders. Thank you.

Christian Wojczewski: Yeah, thanks, Douglas. That is exactly what I would like to avoid, that it becomes a message of a systematic development. We also felt that it is an important data point. As I said, mostly scientific reasons. There was a select number of customers with strategic decisions where they were deciding to relocate funds into other projects. Later stage actually fits well into the message I gave about funding. There are no concerns here whatsoever about business moving outside of Evotec. It is fair to say when you look at the pandemic, fewer projects were killed at early stage. Currently, there is more scrutiny. There is absolutely no indication that this is a trend. That is why I also said when we just look at the beginning of the second half, this trend had reversed.

Christian Wojczewski: As I said, mostly scientific reasons. There was a select number of customers with strategic decisions where they were deciding to reallocate funds into other projects later stage. Actually, it fits well into the message I gave about funding. There is no concerns here whatsoever about business moving outside of Evotec. It's fair to say, when you look at the pandemic, fewer projects were killed at early stage. Currently, there's more scrutiny. There's absolutely no indication that this is a trend. That's why I also said, when we just look at the beginning of the H2, this trend had reversed. Seriously, I don't want to come across as if I'm indicating here that this is a trend. Okay. Just as a follow-up, and I appreciate your point.

Hi, good morning, thanks for taking the question. I'm just curious. I think in the in the prepared remarks you made a comment that you did see, or have seen an increase in change orders and that they were mostly just driven by scientific issues. I was just wondering if you could sort of provide a little more color on that if there was anything thematic. Um and and what would be driving this sort of uh, it sounds like somewhat systematic increase in these change orders. Thank you. Yeah. Uh, thanks, uh, Douglas and, and that's exactly what I uh, would like to avoid that. It becomes a message of a systematic, uh, development. But uh, we also felt that it's an important data point. As I said, mostly scientific reasons there was a select number of customers with strategic decisions where they were deciding to relocate funds into other projects.

Later stage actually fits well into the message. I gave about funding

There is no concerns here. Whatsoever about business moving outside of evotech. Uh,

um, uh, and it's fair to say,

when you look at the pandemic, uh,

your projects were killed at early stage.

Currently there's more scrutiny. So there's absolutely no indication that this is a trend and that's why I also said, when we just look at the beginning of the second half.

Christian Wojczewski: I seriously do not want to come across as if I am indicating here that this is a trend.

This trend had uh, reversed uh but I seriously I don't want to uh um come across as if I'm indicating here that this is a trend.

Douglas Zhao: Okay. Just as a follow-up, I appreciate your point, and I was not trying to suggest it was systematic in terms of an increasing occurrence. I guess what I was just curious was if there was some consistency in the types of changes that you are seeing. Is it shifts within therapeutic areas? Is it adoption or preference for different technologies? Maybe a philosophical change in terms of how people are pursuing R&D programs? Thank you.

Douglas Tsao: I was not trying to suggest it was systematic in terms of sort of an increasing occurrence. I guess what I was just curious was if there was some consistency in the types of changes that you are seeing. Is it shifts within therapeutic areas? Is it adoption or preference for different technologies? Maybe a philosophical change in terms of how people are pursuing R&D programs. Thank you. No. Not at all. Not at all, Douglas. No pattern here. Okay. Great. Thank you so much. As a reminder, if you wish to register for a question, please press star 1 on your telephone. We have a follow-up question from the line of Charles Weston from RBC Europe. Please go ahead. Thanks for extending the call slightly for a couple of quick ones. First of all, we're now halfway through Q3.

Christian Wojczewski: Not at all. Not at all. There is no pattern here.

Douglas Zhao: Okay. Great. Thank you so much.

This is a follow up and I appreciate your point and I was not trying to say suggest it was systematic in terms of sort of an increasing occurrence. I guess what I was just curious was if there was some consistency in the types of changes that you are seeing, um, is it shifts within therapeutic areas? Is it adoption or preference for different Technologies? Maybe a philosophical change in terms of how people are pursuing art programs? Thank you. No, not at all. Not at all. I guess, no pattern here.

Okay, great. Thank you so much.

Paul Hitchin: As a reminder, if you wish to register for a question, please press star and one on your telephone. We have a follow-up question from the line of Charles Weston from RBC Europe. Please go ahead.

A reminder: if you wish to register for a question.

press star and 1 or

follow-up question from the line of Charles Weston from RBC Europe, please go ahead.

Michael Ryskin: Thanks for extending the call slightly. A couple of quick ones. First of all, we are now halfway through Q3. Paul Hitchin, I was wondering if you could give us a sense of what the Q3, Q4 phasing might be in Discovery and Preclinical Development, which I think tends to be more Q4 weighted and also Just - Evotec Biologics.

Charles Weston: Paul, I was wondering if you could give us a sense of what the Q3, Q4 phasing might be in BPD, which I think tends to be more Q4-weighted and also biologics. Thanks, Charles. As I said earlier, the revenue profile for the full year for D&PD is pretty consistent with the H1 dynamics. We see that for D&PD in the H2 to look a little bit like the H1 from a growth profile. That said, from the Just business, we see a significant step up in the H2 from the 16% growth rate that we've seen in the H1. When you think about the phasing, I would expect our overall profile to be consistent with what we saw in 2024 with a significant contribution in the Q4. Thank you. Just one last one on the Sandoz deal.

Uh, thanks for extending the call slightly for a couple of quick ones. Um, first of all, we're now halfway through Q3. Um, so Paul, I was wondering if you could give us a sense of what the Q3 Q4, uh, phasing might be, uh, in dpd, which I think tend to be more people where it did and also biologics.

Cord Dohrmann: Thanks, Charles. As I said earlier, the revenue profile for the full year for Discovery and Preclinical Development is pretty consistent with the first half dynamics. We see that for Discovery and Preclinical Development in the second half to look a little bit like the first half from a growth profile. That said, from the Just - Evotec Biologics business, we see a significant step up in the second half from the 16% growth rate that we have seen in the first half. Then when you think about the phasing, I would expect our overall profile to be consistent with what we saw in 2024 with a significant contribution in the fourth quarter.

Yeah. Um, thanks Charles. Um, so as I said earlier, the revenue profile for the 4 year for dpd is is pretty consistent with the first half Dynamics. Um, so we see that, um, for DP and D in the second half to look a little bit, like the first half from a growth profile. Um, that said, from the the just business we see a significant step up in the second half from the 16% growth rate that we've uh, seen in the first half.

And then, when you think about the phasing, uh, I would expect, um, our overall profile to be consistent with what we saw in in 20124, with a significant contribution in the fourth quarter.

Michael Ryskin: Thank you. Just one last one on the Sandoz deal. Previously, when you did the deal with Sandoz, you indicated that there were obviously supply components, but you also had technology licenses, milestone royalties, et cetera. Is that bit staying unchanged and you are selling the assets? Is that the way to think about it, or would the whole deal be being renegotiated as part of this?

Charles Weston: Previously, when you did the deal with Sandoz, you indicated that there were obviously supply components. You also had technology licenses, milestones, royalties, etc. Has that bit staying unchanged? You're selling the asset? Is that the way to think about it, or is the whole deal being renegotiated as part of this? I think you should think about the Sandoz arrangement to be a holistic arrangement as we move to a new chapter in our relationship. It'll be Thank you. Yeah. That's great. Thanks. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Volker Braun, head of IR and ESG, for any closing remarks. Thank you, Matilde. We would like to thank all attendees in today's call and hope to see as many of you as possible at the various conferences in September and October.

Cord Dohrmann: I think you should think about the Sandoz arrangement to be a holistic arrangement as we move to a new chapter in our relationship. So it will be.

Thank you. Um, and just 1 last 1 on the sound ideal. Um, previously when you did a deal with Sandow, you indicated that there were obviously Supply components, but you also had technology licenses Milestones are all keys. Etc. Um, has that bit is that bit Stained on changed and you're selling the assets is that the way to think about it or is the whole deal being being negotiated to the part of this?

Michael Ryskin: Thank you. Yeah, that's great. Thanks.

I think you should think about the Sandow arrangement to be a holistic Arrangement uh as we uh move to a new chapter in our relationship. So it'll be. Thank you.

Yeah, that's great. Thanks.

Paul Hitchin: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Volker Braun, Head of IR and ESG, for any closing remarks.

Volker Braun: Thank you, Matilde. We would like to thank all attendees in today's call and hope to see as many of you as possible at the various conferences in September and October. We look forward to catching up in our next regular results call on November 5. Until then, I hope you can enjoy the rest of the summer. Thank you. Goodbye.

Question, I would now like to turn the conference back over to phora brown head of ir and ESG for any closing remarks.

Volker Braun: Look forward to catch up in our next regular results call on 5 November. Until then, I hope you can enjoy the rest of the summer. Thank you. Goodbye.

Thank you Matilda, and we would like to thank all attendees in today's call and hope to see as many of you as possible at the various conferences in September and October, and look forward to catch up in our next regular results. Call on the 5th of November, until then, I hope you can enjoy the rest of the summer. And thank you, goodbye.

Paul Hitchin: Ladies and gentlemen, the conference is now over. Thank you for choosing Courseco and thank you for participating in the conference. You may now disconnect your lines.

Ladies and gentlemen, the conference is now over. Thank you for choosing Caruso and thank you for participating in the conference. You may now disconnect your lines, goodbye.