Evotec Third Quarter Financial Results: Growth of Business and Restructuring Impact...

Evotec Third Quarter Financial Results: Growth of Business and Restructuring
Impact Lead the Path to Sustainability

HAMBURG, Germany, Nov. 12, 2009 (GLOBE NEWSWIRE) -- Evotec AG (Frankfurt:EVT)
(TecDAX) (Nasdaq:EVTC) today reported results and corporate updates for the
third quarter and nine months ended September 30, 2009.

Recent Highlights:

* Strong operational performance; important milestones achieved
-- 9 months revenues +16%; 9 months operating result +6%
* Closing of significant alliance with Boehringer Ingelheim (after
period-end) and further new alliances and extensions
* Execution of restructuring program "Evotec 2012 - Action Plan to
Focus and Grow" shows clear results
-- U.S. facility closed as planned; acquisition of Indian RSIPL
completed
* Phase I study with EVT 103 started; start of Phase II with EVT 101
in early 2010
* TecDAX re-entry in October
* Year-end guidance of > EUR 40m revenues and > EUR 65m liquidity
comfortably confirmed; Strong liquidity of EUR 64m, cash flow
positive Q4 expected
1. Operational performance and Discovery Alliance Business update

Strong operational performance (9 months revenues +16%; 9 months operating
result +6%)

Evotec's revenues for the first nine months of 2009 amounted to EUR 29.1
million, an increase of 16% compared to the same period of the previous year
(2008: EUR 25.2 million). Gross margin was strong at 38.3% (2008: 38.0%).
Despite a Q1 impairment charge of EUR 6.6 million and EUR 4.7 million of
restructuring expenses, Evotec's operating loss decreased by 6% to EUR 32.9
million (2008: EUR 35.2 million), before these exceptional items by 38% to EUR
21.6 million (2008: EUR 35.1 million).

In the third quarter of 2009 revenues were EUR 10.4 million (2008: EUR 10.7
million). The operating loss for the third quarter decreased by 54% to EUR 3.8
million (2008: EUR 8.3 million). This significant decrease in operating loss is
a result of the Company's strong top-line performance and its significant
reductions in operating expenses following the implementation of "Evotec 2012 -
Action Plan to Focus and Grow."

Closing of significant alliance with Boehringer Ingelheim

Based on the successful collaboration to date, Boehringer Ingelheim signed a
new, minimum four-year extension of its discovery collaboration with Evotec on
November 9, 2009 (after period-end). Jointly, both companies aim to identify
novel therapeutics in innovative disease-focused programs with an initial focus
on oncology targets. Evotec will receive increased research payments compared to
the original contract as well as payments for the achievement of pre-clinical
milestones. In addition, the contract provides substantial long-term upside for
Evotec through potential clinical milestone achievements and royalties.

Further new alliances and extensions with strategic partners

In October 2009 (after period-end), Evotec extended also another important
collaboration with one of its strategic partners Ono Pharmaceutical, initiating
a new discovery program on an ion channel target. A new research agreement was
signed in September with Biogen Idec. These important contracts clearly
demonstrate the value Evotec brings to its alliance partners in the area of drug
discovery.

Excellent execution on customer programs - important milestones achieved

The Company continues to make excellent progress in its discovery alliances. In
July, Evotec announced the achievement of a research milestone in its drug
discovery alliance with Boehringer Ingelheim. A second milestone was achieved in
October (after period-end). The achievement of both milestones will lead to
total payments of EUR 4.0 million to Evotec. Evotec also achieved a milestone
with Cardioxyl Pharmaceuticals.

2. Acquisitions

Acquisition of Indian RSIPL completed, creating a global leader in drug
discovery and development services

On August 6, 2009, Evotec announced the acquisition of a controlling majority
shareholding of the Indian company Research Support International Private
Limited (RSIPL) for EUR 2.4 million. The acquisition was successfully completed
as of August 31, 2009 and the company is in the process of being fully
integrated as Evotec (India) Ltd.

3. Update on Evotec 2012 Action Plan and cost reductions

Execution of restructuring program shows clear initial results

Based on the "Evotec 2012 - Action Plan to Focus and Grow", Evotec implemented
strict restructuring measures from March 2009 (see press releases of March 27
and May 5, 2009). These measures are clearly reflected in the results of the
third quarter. R&D expenses were down 66% and SG&A expenses were down 13%
compared to the same period of the prior year, leading to a 54% improvement of
the operating result.

U.S. facility of Renovis, Inc. closed as planned; delisting of Evotec ADSs from
NASDAQ initiated; TecDAX re-entry in October

In order to leverage more efficiently its research and development
infrastructure, Evotec decided in May 2009 to concentrate its operations in
Europe. Consequently, the Company has now completed the closure of the former
facility of Renovis, Inc. in South San Francisco. In November, Evotec decided to
delist from the NASDAQ Global Market and to prepare for a de-registration with
the Securities and Exchange Commission (SEC) in the future. In parallel, Evotec
reentered into the German technology index TecDAX. These steps are intended to
further streamline Evotec's activities, to reduce unnecessary complexity in its
capital market presence and to focus the liquidity of Evotec stock on one
trading platform.

4. Status of clinical programs and partnering of assets

Roche collaboration: Phase I study with EVT 103 started; start of Phase II with
EVT 101 in early 2010

In September, Evotec started, as planned, the first Phase I study for EVT 103.
Data from this study are expected to be reported in early 2010. EVT 103 is the
next generation molecule following EVT 101. Both members of the EVT 100 compound
family are planned to be developed for treatment-resistant depression (TRD) in
collaboration with Roche.

Preparations of the Phase II TRD study for EVT 101 are ongoing, however, Evotec
now expects the study to start in early 2010 rather than 2009, based on the
latest feedback of the FDA on toxicology and safety monitoring and due to a more
complex and bigger study design.

5. Guidance

Strong liquidity of EUR 64m, cash flow positive Q4 expected, year-end guidance
of > EUR 40m revenues and > 65m liquidity comfortably confirmed

The Company confirms all financial targets for the fiscal year 2009 published on
March 27 and updated on August 7, 2009. In the context of its second quarter
report, Evotec increased its 2009 revenue guidance to above EUR 40 million
(previously above EUR 35 million). R&D and SG&A expenses are expected to
significantly decrease year-on-year. On this basis, Evotec's Group operating
result before impairment for 2009 is expected to improve significantly over
2008.

Liquidity including cash and cash equivalents, short-term investments and
auction rate securities at the end of September 2009 is at EUR 64.0 million.
With strong revenue contributions, including a EUR 2.5 million milestone payment
from Boehringer Ingelheim, Evotec expects to report a cash flow positive fourth
quarter 2009. On this basis, Evotec remains confident to deliver on its
liquidity guidance of above EUR 65 million at constant year-end 2008 currencies
by the end of 2009, a strong basis to comfortably develop the Company to
sustainability.

Conference Call

The Company is going to hold a conference call to discuss the results and to
give an update on its business strategy:

Conference call details:

Date: Thursday, November 12, 2009
Time: 09.30 a.m. CST
08.30 a.m. GMT
03.30 a.m. U.S. time (East Coast)

From Europe: +49.(0)69.2222 9550 (Germany)
+44.(0)20.7784 1036 (UK)
From the U.S.: +1.718.354 1152
Access Code: 9023741
A simultaneous slide presentation for participants dialing in via phone is
available at www.equitystory.com, password: evotec121109.

Webcast details

To join the audio webcast and to access the presentation slides you will find a
link on our home page www.evotec.com shortly before the event.

A replay of the conference call will be available for 24 hours and can be
accessed in Europe by dialing +49.(0)69.2222 2236 (Germany) or +44.(0)20.7111
1244 (UK) and in the U.S. by +1.347.366 9565. The access code is 9023741#. The
on-demand version of the webcast will be available on our website:
www.evotec.com -- Investors -- Finance -- Financial Reports 2008 -- 2009.

About Evotec AG

Evotec is a leader in the discovery and development of novel small molecule
drugs. The Company has built substantial drug discovery expertise and an
industrialized platform that can drive new innovative small molecule compounds
into the clinic. In addition, Evotec has built a deep internal knowledge base in
the treatment of diseases related to neuroscience, pain, and inflammation.
Leveraging these skills and expertise the Company intends to develop
best-in-class differentiated therapeutics and deliver superior science-driven
discovery alliances with pharmaceutical and biotechnology companies. Evotec has
long-term discovery alliances with partners including Boehringer Ingelheim,
CHDI, Novartis, Ono Pharmaceutical and Roche. Evotec has product candidates in
clinical development and a series of preclinical compounds and development
partnerships, including for example a strategic alliance with Roche for the EVT
100 compound family, subtype selective NMDA receptor antagonists for use in
treatment-resistant depression. For additional information please go to
www.evotec.com.

Forward-looking statements

Information set forth in this report contains forward-looking statements, which
involve a number of risks and uncertainties. Such forward-looking statements
include, but are not limited to, statements about our ability to achieve a cash
flow positive fourth quarter in 2009 and to deliver on our liquidity guidance,
our expectation that our funds will be sufficient to finance our planned
activities through to sustainability, our expectation that our reentry into the
German technology index TecDAX will increase liquidity for our shareholders and
that our voluntary delisting from NASDAQ and de-registration with the SEC will
streamline our activities and focus the liquidity of Evotec's stock on one
trading platform, our expectations and assumptions concerning regulatory,
clinical and business strategies, the progress of our clinical development
programs and timing of the commencement and results of our clinical trials,
strategic collaborations and management's plans, objectives and strategies.
These statements are neither promises nor guarantees, but are subject to a
variety of risks and uncertainties, many of which are beyond our control, and
which could cause actual results to differ materially from those contemplated in
these forward-looking statements. In particular, the risks and uncertainties
include, among other things: risks that the Company may be unable to reduce its
cash burn through recent restructuring and cost containment measures and may not
recognize the results of such measures within the expected timeframe; risks that
product candidates may fail in the clinic or may not be successfully marketed or
manufactured; the risk that we will not achieve the anticipated benefits of our
collaborations, partnerships and acquisitions in the timeframes expected, or at
all; the risk that we will not achieve the anticipated benefits of our voluntary
delisting from NASDAQ and de-registration with the SEC; risks relating to our
ability to advance the development of product candidates currently in the
pipeline or in clinical trials; our inability to further identify, develop and
achieve commercial success for new products and technologies; the risk that
competing products may be more successful; our inability to interest potential
partners in our technologies and products; our inability to achieve commercial
success for our products and technologies; our inability to protect our
intellectual property and the cost of enforcing or defending our intellectual
property rights; our failure to comply with regulations relating to our products
and product candidates, including FDA requirements; the risk that the FDA may
interpret the results of our studies differently than we have; the risk that
clinical trials may not result in marketable products; the risk that we may be
unable to successfully secure regulatory approval of and market our drug
candidates; and risks of new, changing and competitive technologies and
regulations in the U.S. and internationally.

The list of risks above is not exhaustive. Our most recent Annual Report on Form
20-F, filed with the Securities and Exchange Commission, and other documents
filed with, or furnished to the Securities and Exchange Commission, contain
additional factors that could impact our businesses and financial performance.
We expressly disclaim any obligation or undertaking to release publicly any
updates or revisions to any such statements to reflect any change in our
expectations or any change in events, conditions or circumstances on which any
such statement is based.

Third Quarter Report 2009

Key Figures of Consolidated Interim Statements of Operations

Evotec AG and Subsidiaries

Euro in thousands except share data and per share data
---------------------------------------------------------------------
Nine months ended Change
September 30, in %
---------------------------------------------------------------------
2009 2008
---------------------------------------------------------------------

Revenue 29,135 25,173 15.7
---------------------------------------------------------------------
Gross margin in % 38.3 38.0
---------------------------------------------------------------------

Research and development expenses 19,501 31,446 (38.0)
---------------------------------------------------------------------
Selling, general and administrative
expenses 13,136 12,830 2.4
---------------------------------------------------------------------
Amortization of intangible assets
and impairment 6,924 476 --
---------------------------------------------------------------------
Restructuring expenses 4,654 132 --
---------------------------------------------------------------------
Other operating income 3,485 1,868 86.6
---------------------------------------------------------------------
Other operating expenses 3,352 1,751 91.4
---------------------------------------------------------------------

---------------------------------------------------------------------
Operating result (32,932) (35,190) 6.4
---------------------------------------------------------------------
Operating result* (21,648) (35,058) 38.3
---------------------------------------------------------------------

---------------------------------------------------------------------
Net result (34,071) (28,958) (17.7)
---------------------------------------------------------------------

---------------------------------------------------------------------
Weighted average shares outstanding 106,775,495 91,118,012
---------------------------------------------------------------------
Net loss per share (basic and
diluted) (0.32) (0.32)
---------------------------------------------------------------------

---------------------------------------------------------------------
Three months ended Change
September 30, in %
---------------------------------------------------------------------
2009 2008
---------------------------------------------------------------------

---------------------------------------------------------------------
Revenue 10,396 10,658 (2.5)
---------------------------------------------------------------------
Gross margin in % 39.4 55.6
---------------------------------------------------------------------

---------------------------------------------------------------------
Research and development expenses 3,208 9,499 (66.2)
---------------------------------------------------------------------
Selling, general and administrative
expenses 4,123 4,765 (13.5)
---------------------------------------------------------------------
Amortization of intangible assets
and impairment 113 79 43.0
---------------------------------------------------------------------
Restructuring expenses 518 2 --
---------------------------------------------------------------------
Other operating income 2,757 791 248.5
---------------------------------------------------------------------
Other operating expenses 2,705 677 299.6
---------------------------------------------------------------------

---------------------------------------------------------------------
Operating result (3,815) (8,305) 54.1
---------------------------------------------------------------------
Operating result* (3,297) (8,303) 60.3
---------------------------------------------------------------------

---------------------------------------------------------------------
Net result (3,655) (3,106) (17.7)
---------------------------------------------------------------------

---------------------------------------------------------------------
Weighted average shares outstanding 106,935,167 105,818,799
---------------------------------------------------------------------
Net loss per share (basic and
diluted) (0.03) (0.03)
---------------------------------------------------------------------

*Before impairment and restructuring expenses.

Key Figures of Consolidated Interim Balance Sheets
Evotec AG and Subsidiaries

Euro in thousands
---------------------------------------------------------------------
Sep 30, Dec 31, Change
2009 2008 in %
---------------------------------------------------------------------

---------------------------------------------------------------------
Liquidity* 63,976 92,401 (30.8)
---------------------------------------------------------------------
Working capital (7,797) (9,911) 21.3
---------------------------------------------------------------------
Current and non-current portion of
loans and finance lease obligations 9,485 11,328 (16.3)
---------------------------------------------------------------------
Stockholders' equity 121,377 149,859 (19.0)
---------------------------------------------------------------------

---------------------------------------------------------------------
Total assets 154,675 182,900 (15.4)
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*Including auction rate securities.
-0-
CONTACT: Evotec AG
Dr. Werner Lanthaler, Chief Executive Officer
+49.(0)40.56081-242
werner.lanthaler@evotec.com