1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Valuation
Discussion
Symbol
EVO
Event Date
2021-11-04
IPO Date (Actual)
2021-11-03
Sector
Health Care
Subsector
Pharmaceuticals
Offer Range
$21.75-$21.75
Shares Offered
20M
$9.2B
Implied Upside vs Midpoint
Description
We are an industry-leading drug discovery and development partner for the pharmaceutical and biotechnology industry. Our mission is to discover best and first-in-class medicines for a broad range of difficult to treat diseases in collaboration with our partners. To that end, we have built a comprehensive suite of fully integrated, next generation technology platforms which we believe will transform the way new drugs are discovered. By leveraging the advanced capabilities of our integrated platforms, we are able to provide solutions to our partners that enable significant improvements in the quality of new drugs while accelerating the drug discovery process and reducing the high cost of attrition often associated with traditional drug discovery processes. Traditional drug discovery is a lengthy, costly and complex process that is subject to a high degree of uncertainty and high rates of failure. In addition, identifying novel compounds requires extensive screening and in vitro and in vivo testing, which can be both labor intensive and time-consuming. For every successful medicine that is commercialized, there are 5,000 to 10,000 compounds that fail in drug discovery. Moreover, it takes approximately 12 years of intense research and development and approximately $2 billion for a new medicine to reach patients. In order to address demand for faster, cheaper and better outcomes of early-stage drug discovery processes, we deliver fully-integrated drug discovery and development programs to our partners. Our expertise in deep learning and computational approaches and the integration of such knowledge across the full value chain of research, drug discovery and development is industry-leading. We possess capabilities across the early stages of precision medicine discovery, including biomarker selection, human pharmacokinetics (PK) testing, clinical trial planning, safety assessment and manufacturability. We achieve differentiated results by integrating these firmly-established R&D capabilities, cutting edge proprietary technologies and the knowledge of our experienced scientists. Our drug discovery therapeutic area expertise and capabilities covers diabetes and its complications, fibrosis, infectious diseases, CNS diseases, oncology, pain and inflammation, immunology, rare diseases, respiratory diseases, and women’s health. For the foreseeable future, a substantial majority of revenues generated from the offerings to our partners will be based on “fee-for-service” agreements or FTE-based arrangements, recognized across both our reporting segments, EVT Execute and EVT Innovate. Subject to the degree of integration of proprietary technologies, or if alliances are built on the basis of in-house R&D projects as part of EVT Innovate, we may also benefit from milestone, license and royalty payments. In the year ended December 31, 2020 and the six months ended June 30, 2021, 3.4% and 2.1%, respectively, of our total group revenues from third parties were derived from milestone, license and royalty payments. Recent scientific and technological advancements, including the advent of patient specific disease modelling based on induced pluripotent stem cells (“iPSC”), genomics, transcriptomics, proteomics and metabolomics, have significantly shifted the understanding of molecular biology, cell regulation and the pathogenesis of individual diseases. As scientific research advances rapidly towards understanding diseases on a molecular level and the development of personalized therapies, the need has increased for new platforms, tools and methods to better understand, interpret and translate the vast information and data that is being generated. Over the past 25 years and in response to the challenges of the dynamic industry we serve, we have positioned Evotec at the forefront of this revolution in drug discovery, emphasizing disease, patient and drug relevance at the beginning of the drug discovery process. We believe that we are the only company among our identified competitors that offers chemistry, biology, transcriptomics, proteomics and iPSC-based disease modelling with multi-modality expertise across small molecules, biologics, antisense, cell and gene therapy, as well as manufacturing capabilities that span the drug development continuum, from discovery through commercialization. This belief is based on our industry knowledge and review of our identified competitors’ public disclosures about their offered services, which we believe provide a sufficient basis for our belief. We have developed proprietary artificial intelligence and machine learning (“AI/ML”) capabilities that facilitate industry-leading data generation, data analytics and efficacy prediction. We believe the integration of these platforms, in a holistic way, results in differentiated scientific disease insights, operational efficiencies and technological capabilities allowing us to drive rapid progress and successful outcomes throughout the discovery and pre-clinical development phase where innovation is most critical. With more than 3,000 scientists, we leverage our technologies and platforms to develop precision medicines across multiple modalities, with the aim of ultimately making the right drug available to the right patient. Our drug candidates can be created at a more affordable cost (at up to half the cost of current benchmarks for discovery through investigational new drug (“IND”) application) than those currently generated by industry players, and at a faster speed (at up to 30% less time than existing benchmarks for discovery through IND application). As an example, together with Bayer, we published a white paper showing that our endometriosis project entailed a total cost to IND of €30 million, which is significantly lower than the industry benchmark of approximately $75 million (€63 million) and that the first of three clinical candidates under the collaboration was progressed to IND in less than four years, 30% less than industry benchmarks. These industry benchmarks are derived from a report we commissioned by an independent consultant for market research and not specifically for inclusion in this prospectus. Our ability to save time during development is important for our partners and ourselves as the potential to reach IND up to 18 months faster than the competition generates real added value in a competitive marketplace for innovative breakthrough medicines. Our work to date has resulted in 11 disclosed pipeline assets in clinical development, and over 100 pipeline assets in the discovery and preclinical phase. Moreover, we have developed a broad multi-disciplinary network of collaborations with over 800 partnerships across the pharmaceutical and biotechnology industry and academia. We report the results of our work and collaborations through two operating segments: • EVT Execute: primarily includes fee-for-service and full-time-equivalent (“FTE”)-rate based arrangements where our customers own the intellectual property. EVT Execute accounted for 79% of our revenues from third parties in the six months ended June 30, 2021 and 79% and 79% for the years ended December 31, 2020 and 2019, respectively. • EVT Innovate: includes our internal R&D activities as well as services and partnerships that originate from these R&D activities. In addition to FTE-based revenues, we generate revenues from milestones and royalties on our pipeline assets. EVT Innovate accounted for 21% of our revenues from third parties in the six months ended June 30, 2021 and 21% and 21% for the years ended December 31, 2020 and 2019, respectively. We leverage our offerings described throughout this prospectus across both EVT Execute and EVT Innovate. Revenue generated through our collaboration arrangements may contribute to either the EVT Execute segment or the EVT Innovate segment, depending on the nature of the contract with our customer, the ownership of the intellectual property, the stage of the project and our right to generate revenue from development success. We believe our partnership model is unique and allows us to balance and diversify the risks associated with drug discovery. --- We were incorporated on December 8, 1993 as a company with limited liability (Gesellschaft mit beschränkter Haftung) under the laws of Germany under the name EVOTEC BioSystems GmbH, formerly registered with the commercial register (Handelsregister) of the local court (Amtsgericht) of Hamburg, Germany, under the number HRB 54731. On August 7, 1998, we were converted into a German stock corporation (Aktiengesellschaft) under the laws of Germany under the name EVOTEC BioSystems Aktiengesellschaft, formerly registered with the commercial register (Handelsregister) of the local court (Amtsgericht) of Hamburg, Germany, under the number HRB 68223. On February 28, 2002, we changed our name to Evotec OAI AG, and on June 8, 2005, we changed our name to Evotec AG. On March 29, 2019, we converted into a European stock corporation (Societas Europaea, or SE) under the laws of Germany and the European Union called Evotec SE, registered with the commercial register (Handelsregister) of the local court (Amtsgericht) of Hamburg, Germany, under the number HRB 156381. Our principal executive offices are located at Essener Bogen 7, Hamburg, Germany. Our telephone number is +49 40 560 81-0. Our website address is www.evotec.com.
Evotec SE annual income statement and balance sheet, FY 2022 to FY 2025, as reported in SEC filings (EUR).
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Revenue | EUR 751M | EUR 781M | EUR 797M | EUR 788M |
| Gross profit | EUR 174M | EUR 175M | EUR 115M | EUR 114M |
| Operating income | EUR 20.9M | (EUR 47.5M) | (EUR 143M) | (EUR 56.2M) |
| Net income | (EUR 176M) | (EUR 83.9M) | (EUR 196M) | (EUR 104M) |
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Total assets | EUR 2.3B | — | EUR 1.9B | EUR 1.7B |
| Total equity | EUR 1.2B | EUR 1.1B | EUR 953M | EUR 814M |
| Cash & equivalents | EUR 415M | EUR 511M | EUR 306M | EUR 419M |