Evotec Announces Strong Second Quarter Financial Results
(Thomson Reuters ONE) - Corporate news announcement processed and transmitted by Hugin AS.The issuer is solely responsible for the content of this announcement. ------------------------------------------------------------------------------------ Hamburg, Germany - Evotec AG (Frankfurt Stock Exchange: EVT; NASDAQ:EVTC) today reported results and corporate updates for the secondquarter 2009.Recent Highlights:* Strong quarterly performance leads to 46% revenue growth and 29% improvement of operating result* Further milestone payment received in drug discovery collaboration with Boehringer Ingelheim (after period-end)* Royalty income earned from DeveloGen* Several new discovery contracts signed* Failure of EVT 302 in smoking cessation; positive Phase I results with EVT 401; alliance with Roche on EVT 100 compound family* Execution of restructuring program "Evotec 2012 - Action Plan to Focus and Grow" yields first results* Acquisition of Indian RSIPL to strategically leverage Discovery Alliance Business and create a global leader in drug discovery and development services (after period-end)* Revenue guidance increased; all other financial projections confirmed despite the acquisition of RSIPL1. Operational performanceStrong quarterly performance leads to 46% revenue growth and 29%improvement of operating resultEvotec's revenues for the second quarter 2009 grew strongly by 46% toEUR 10.5 million (Q2 2008: EUR 7.2 million). This is mainly theresult of strong underlying revenues from Evotec's DiscoveryAlliances Business, of a portion of the upfront payment for the EVT100 compound family from Roche (EUR 0.9 million) as well as oflicense and royalty income totaling EUR 1.8 million from Roche andDeveloGen. Gross margin improved strongly to 38.8% (Q2 2008: 20.8%)Evotec's operating loss for the second quarter 2009 improved by 29%to EUR 8.9 million (Q2 2008: EUR 12.5 million) despite restructuringexpenses in the amount of EUR 2.7 million. This improvement is aresult of the Company's strong top-line performance and its costreductions in SG&A and R&D following the implementation of "Evotec2012 - Action Plan to Focus and Grow".Net loss for the second quarter 2009 amounted to EUR 8.6 million (Q22008: EUR 12.0 million).Liquidity, which includes cash and cash equivalents (EUR 38.4million), short-term investments (EUR 25.2 million) and auction ratesecurities (EUR 9.1 million), at the end of June 2009 amounted to EUR72.7 million (December 31, 2008: EUR 92.4 million).Royalty income earned from DeveloGenThe royalty income from DeveloGen was a result of the upfront paymentDeveloGen received in its collaboration with Boehringer Ingelheim(published on May 13, 2009) on a target addressing insulinresistance. The target formed part of the Joint Venture betweenEvotec and DeveloGen which ended in 2005. As part of the agreement,DeveloGen maintained certain IP rights including those for theinsulin target, and Evotec retained participation right on all futureincome DeveloGen might generate from the target. Under the terms ofthe agreement with Boehringer Ingelheim, DeveloGen received anupfront payment of EUR 7 million, and has the opportunity to earnpotential additional milestone payments as well as tiered salesperformance payments.Further milestone payment received in drug discovery collaborationwith Boehringer IngelheimOn July 29, 2009, Evotec announced that a further research milestone,leading to payments to Evotec, has been successfully achieved in itsdrug discovery collaboration with Boehringer Ingelheim. The milestonewas achieved for the identification and selection of a secondcompound to be advanced into preclinical development within anexisting program. This represents the sixth milestone achieved inthis multi-year, multi-target collaboration and is the secondcompound selected for pre-development in the last twelve months.Several new discovery contracts signedIn July 2009, Evotec announced a significant research collaborationwith Cubist Pharmaceuticals utilizing Evotec's world-leadingfragment-based drug discovery platform and a high-throughputscreening collaboration with Alios Biopharma. In addition,Evotec-RSIL extended its library synthesis collaboration with FerrerGrupo.2. Status of clinical programs and partnering of assetsFailure of EVT 302 in smoking cessation; positive Phase I resultswith EVT 401; alliance with Roche on EVT 100 compound familyIn April 2009, Evotec reported that the Phase II smoking cessationstudy of its MAO-B inhibitor EVT 302 failed to meet its clinicalendpoints and Evotec subsequently stopped the development of thecompound in this indication. All other clinical pipeline projectsdeveloped on track during the second quarter. On June 29, 2009,Evotec announced the successful completion of the first Phase I studywith EVT 401, a potential novel oral treatment for inflammatoryconditions such as Rheumatoid Arthritis. The compound was safe andwell tolerated and demonstrated the desired pharmacodynamic activityin healthy volunteers. Evotec is now focusing its efforts onoptimizing the oral dose formulation, completing the Phase I studies,and preparing for Phase II studies in Rheumatoid Arthritis.Preparations of the Phase II clinical study for EVT 101 intreatment-resistant depression and a Phase I program for EVT 103 areon track to start in the second half of 2009. In March 2009, Evotecsigned a partnership with Roche for the development of the EVT 100compound family with total potential payments exceeding $300 million.3. Update on Evotec 2012 Action Plan and cost reductionsExecution of restructuring program "Evotec 2012 - Action Plan toFocus and Grow" yields first resultsBased on the "Evotec 2012 - Action Plan to Focus and Grow" Evotecimplemented strict restructuring measures during the course of thesecond quarter. Evotec initiated headcount reductions inadministrative functions by 20% and, following the setback in theprogress of Evotec's clinical pipeline, headcount reductions in theclinical development group by approximately 50%. In addition, theCompany re-engineered its drug discovery and development operationsto more efficiently leverage its research and developmentinfrastructure. All proprietary programs are now managed throughEvotec's European operations and the Company is on course to finallyclose its US operations in South San Francisco, California, by theend of the third quarter.As a consequence of these measures, as compared to the prior year,Evotec's headcount as of June 30, 2009 decreased by 60 people to 370;R&D expenses were down 35% and SG&A expenses were down 11% in thesecond quarter, despite the fact that in the same quarter last year,the US research and developments programs were consolidated intoEuropean operations only after May 2. Expenses are expected tofurther decline and the full impact of Evotec's restructuring will bereflected in the financial results for the second half of 2009.4. AcquisitionsAcquisition of Indian RSIPL to strategically leverage DAB and createa global leader in drug discovery and development servicesOn August 6, 2009, Evotec announced the acquisition of a controllingmajority shareholding of the Indian organization Research SupportInternational Private Limited (RSIPL) for approximately EUR 2.8million in cash, a portion of which includes a potential earn-out.With this acquisition Evotec expands its chemistry capacity byapproximately 160 scientists and delivers on its strategy asdescribed in the "Evotec 2012 - Action Plan to Focus and Grow" tocreate the global partner of choice for the pharmaceutical andbiotechnology industries in discovery and early development services.This transaction adds a complementary drug discovery operation andcapability in a cost-effective location to Evotec's alreadyworld-leading discovery platform and efficiently increases itsability to deliver high quality drug discovery and developmentservices to its partners.On May 7, 2009, Evotec also acquired the zebrafish screeningoperations of Summit Corporation plc to further strengthen itsstate-of-the-art technology platform. These strategic technology andcapacity additions further validate Evotec's goal to become thenumber one global provider of discovery and development services.5. GuidanceRevenue guidance increased; all other financial targets confirmeddespite the acquisition of RSIPLThe Company increases its 2009 revenue guidance to above EUR 40million (previously above EUR 35 million) and confirms all otherfinancial targets for the fiscal year 2009 published in March despitethe acquisition of RSIPL. Liquidity at the end of June 2009 is at EUR72.7 million. With the contribution of milestone receipts fromresearch collaborations and the full impact of Evotec's restructuringmeasures, cash consumption is expected to be reduced considerably inthe second half of the year. On this basis, Evotec remains confidentto deliver on its liquidity guidance of above EUR 65 million by theend of 2009.Conference CallThe Company is going to hold a conference call to discuss theresults:Conference call detailsDate: Friday, August 7, 2009Time: 09.30 a.m. CEST 08.30 a.m. BST 03.30 a.m. US time (East Coast)From Europe: +49.(0)69.5007 1308 (Germany) +44.(0)20.7806 1956 (UK)From the US: +1.718.354 1388Access Code: 8676443A simultaneous slide presentation for participants dialing in viaphone is available at www.equitystory.com, password: evotec0809.Webcast detailsTo join the audio webcast and to access the presentation slides youwill find a link on our home page www.evotec.com shortly before theevent.A replay of the conference call will be available for 24 hours andcan be accessed in Europe by dialing +49.(0)69.22222 0418 (Germany)or +44.(0)20.7806 1970 (UK) and in the US by +1.718.354 1112. Theaccess code is 8676443#. The on-demand version of the webcast will beavailable on our website: www.evotec.com - Investors - FinancialReports.Forward-looking statementsInformation set forth in this press release contains forward-lookingstatements, which involve a number of risks and uncertainties. Suchforward-looking statements include, but are not limited to,statements about our expectations and assumptions concerningregulatory, clinical and business strategies, the progress of ourclinical development programs and timing of the results of ourclinical trials, strategic collaborations and management's plans,objectives and strategies. These statements are neither promises norguarantees, but are subject to a variety of risks and uncertainties,many of which are beyond our control, and which could cause actualresults to differ materially from those contemplated in theseforward-looking statements. In particular, the risks anduncertainties include, among other things: risks that the Company maybe unable to reduce its cash burn through recent restructuring andcost containment measures and may not recognize the results of suchmeasures within the expected timeframe; risks that product candidatesmay fail in the clinic or may not be successfully marketed ormanufactured; the risk that we will not achieve the anticipatedbenefits of our collaborations, partnerships and acquisitions in thetimeframes expected, or at all; risks relating to our ability toadvance the development of product candidates currently in thepipeline or in clinical trials; our inability to further identify,develop and achieve commercial success for new products andtechnologies; the risk that competing products may be moresuccessful; our inability to interest potential partners in ourtechnologies and products; our inability to achieve commercialsuccess for our products and technologies; our inability to protectour intellectual property and the cost of enforcing or defending ourintellectual property rights; our failure to comply with regulationsrelating to our products and product candidates, including FDArequirements; the risk that the FDA may interpret the results of ourstudies differently than we have; the risk that clinical trials maynot result in marketable products; the risk that we may be unable tosuccessfully secure regulatory approval of and market our drugcandidates; and risks of new, changing and competitive technologiesand regulations in the U.S. and internationally.The list of risks above is not exhaustive. Our most recent AnnualReport on Form 20-F, filed with the Securities and ExchangeCommission, and other documents filed with, or furnished to theSecurities and Exchange Commission, contain additional factors thatcould impact our businesses and financial performance. We expresslydisclaim any obligation or undertaking to release publicly anyupdates or revisions to any such statements to reflect any change inour expectations or any change in events, conditions or circumstanceson which any such statement is based.Contact: Dr Werner Lanthaler, Chief Executive Officer,Evotec AG, Tel.: +49.(0)40.56081-242, werner.lanthaler(at)evotec.comKey Figures of Consolidated Interim Statements of OperationsEvotec AG and SubsidiariesEuro in thousands except share data and per share data+----------------------------------------------------------------------------------------+| |Six months ended June 30,|Change|Three months ended June|Change|| | | in % | 30, | in % ||------------------------+-------------------------+------+-----------------------+------|| | 2009 | 2008 | | 2009 | 2008 | ||------------------------+-------------+-----------+------+------------+----------+------|| | | | | | | ||------------------------+-------------+-----------+------+------------+----------+------||Revenue | 18,739| 14,515| 29.1| 10,501| 7,202| 45.8||------------------------+-------------+-----------+------+------------+----------+------||Gross margin in % | 37.6| 25.2| | 38.8| 20.8| ||------------------------+-------------+-----------+------+------------+----------+------|| | | | | | | ||------------------------+-------------+-----------+------+------------+----------+------||Research and development| 16,293| 21,947|(25.8)| 5,974| 9,137|(34.6)||expenses | | | | | | ||------------------------+-------------+-----------+------+------------+----------+------||Selling, general and | 9,013| 8,065| 11.8| 4,220| 4,720|(10.6)||administrative expenses | | | | | | ||------------------------+-------------+-----------+------+------------+----------+------||Amortization of | 6,811| 397| -| 103| 96| 7.3||intangible assets and | | | | | | ||impairment | | | | | | ||------------------------+-------------+-----------+------+------------+----------+------||Restructuring expenses | 4,136| 130| -| 2,692| 14| -||------------------------+-------------+-----------+------+------------+----------+------||Other operating income | 728| 1,077|(32.4)| 508| 655|(22.4)||------------------------+-------------+-----------+------+------------+----------+------||Other operating expenses| 647| 1,074|(39.8)| 463| 694|(33.3)||------------------------+-------------+-----------+------+------------+----------+------|| | | | | | | ||------------------------+-------------+-----------+------+------------+----------+------||Operating result | (29,117)| (26,885)| (8.3)| (8,868)| (12,507)| 29.1||------------------------+-------------+-----------+------+------------+----------+------||Operating result* | (18,351)| (26,755)| 31.4| (6,176)| (12,493)| 50.6||------------------------+-------------+-----------+------+------------+----------+------|| | | | | | | ||------------------------+-------------+-----------+------+------------+----------+------||Net result | (30,416)| (25,852)|(17.7)| (8,569)| (12,012)| 28.7||------------------------+-------------+-----------+------+------------+----------+------|| | | | | | | ||------------------------+-------------+-----------+------+------------+----------+------||Weighted average shares | 106,694,336| 83,686,845| | 106,822,912|93,505,244| ||outstanding | | | | | | ||------------------------+-------------+-----------+------+------------+----------+------||Net loss per share | (0.29)| (0.31)| | (0.08)| (0.13)| ||(basic and diluted) | | | | | | |+----------------------------------------------------------------------------------------+*Before impairment and restructuring expenses.Key Figures of Consolidated Interim Balance SheetsEvotec AG and SubsidiariesEuro in thousands+-------------------------------------------------------------------+| | June 30, 2009 | Dec 31, | Change || | | 2008 | in % ||--------------------------------+---------------+---------+--------|| | | | ||--------------------------------+---------------+---------+--------|| Liquidity* | 72,705 | 92,401 | (21.3) ||--------------------------------+---------------+---------+--------|| Working capital | (8,621) | (9,911) | 13.0 ||--------------------------------+---------------+---------+--------|| Current and non-current | | | || portion of loans and finance | 8,991 | 11,328 | (20.6) || lease obligations | | | ||--------------------------------+---------------+---------+--------|| Stockholders' equity | 127,503 | 149,859 | (14.9) ||--------------------------------+---------------+---------+--------|| | | | ||--------------------------------+---------------+---------+--------|| Total assets | 161,252 | 182,900 | (11.8) |+-------------------------------------------------------------------+*Including auction rate securities.http://hugin.info/131215/R/1333263/315988.pdfhttp://hugin.info/131215/R/1333263/316022.pdf --- End of Message ---Evotec AGSchnackenburgallee 114 Hamburg GermanyWKN: 566480; ISIN: DE0005664809 ; Index: Prime All Share, CDAX, HDAX, MIDCAP, TECH All Share;Listed: Prime Standard in Frankfurter Wertpapierbörse, Freiverkehr in Börse Berlin, Freiverkehr in Bayerische Börse München, Freiverkehr in Börse Düsseldorf, Freiverkehr in Börse Stuttgart, Freiverkehr in Hanseatische Wertpapierbörse zu Hamburg, Freiverkehr in Niedersächsische Börse zu Hannover, Regulierter Markt in Frankfurter Wertpapierbörse;
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