Dear ladies and gentlemen, welcome to the conference call of Evotec SE. At our customer's request, this conference will be recorded. [Operator Instructions]. May I now hand you over to Werner Lanthaler, CEO, who will lead you through the conference -- this conference. Please go ahead.

Thank you very much. Welcome to our annual report 2020, the data-driven R&D Autobahn to Cures. It's great that you're on this call, and thank you so much for following Evotec. If you go to Page 2 of the presentation that we put out there and that I invite you to follow throughout this conference call, let me first tell you that I'm here together with my team in Hamburg, and I'm very happy to be here with Enno, our CFO; to be here with our COO, Craig; and our CSO, Cord. And let me start by thanking the whole company but also my closest team for a very special 2020. We did what every company should do. We were looking for the opportunity within the global pandemic crisis. We were forced to reexamine all our processes and practices, and we did it. And we took the chance to take the very best out of this moment, and we want to keep the best practices for the time beyond the COVID crisis, which will come and where we will come even stronger out of that crisis than ever before. With this, let me tell you that Evotec is in a strong situation, maybe it's fair to say that we're in a very strong situation. As I'm talking about the team, I would also like to highlight and congrat Cord to his appointment to the German Council for Science and Humanities. This is fantastic for Germany, Europe, but also the world because with this, we bring a person who is really outstanding into the essential questions that will lead the industry forward, that will lead the society forward, and with this, I'm very happy that we were able to see this appointment from Cord into this system. When you go to…

Yes. Thank you, Werner, and a warm welcome also from my side today here from Hamburg. This is to introduce you to our financial performance 2020. And let's start on Page 15 with a look on our consolidated numbers. 2020 was another landmark in Evotec's growth over the last years. We, for the first time, exceeded the €500 million revenue line, and this despite the global COVID pandemic. 12-month 2020 numbers show a very good 12% increase on the revenue line. I will come back to the details and also to the composition of the growth factors on Page 18 later on. The gross margin amounted to 25%, as expected, lower than last year. And this is mainly due to the fadeout of the Sanofi subsidy for the site in Toulouse and a lower level of milestone achievements, partially due to the slippage triggered by the COVID-19 pandemic, plus a growing part of margin-neutral IFRS 15 sales being recognized. R&D expenses increased by 9% compared to last year's level, especially driven by further enhancing our multiple platforms and investing into our co-owned pipeline. The growth in SG&A stands at 16% and relates to the overall organic and inorganic growth, like, for example, the first time addition of the first half 2020 numbers from Just-Evotec Biologics, the ramp-up of the J.POD 1 in Seattle, plus the added new business setup of Evotec GT in Austria and the integration of the acquired biopark by Sanofi called BBS in Toulouse. The other operating income turns out to be roughly on the last level -- last year's level and contains 2 main components: R&D tax credits and the Sanofi recharges for ID Lyon. All in all, that development results in a slight increase of the other operating result. With a total of €106.6 million,…

Thank you, Enno, and good morning, and good afternoon to everybody on the call. At Evotec, we believe that the precision medicine megatrend is increasingly driving the pharmaceutical industry. And maybe more importantly, we believe that this trend is still at its very beginning. This is really best illustrated by the fact that we are still living in a world where 90% of all drugs only work in 50% of all patients. The associated costs of these ineffective treatments are enormous. Current estimates are exceeding €350 billion annually. More precise medicines and more precise interventions are the only way to really improve on this. At Evotec, we also believe that we can play a significant role in accelerating precision medicine by integrating and industrializing emerging technologies early on into the drug discovery process. This will allow us to deliver more effective therapeutics to patient populations that will actually benefit from these. For all of these reasons, we have been building what we believe will be the precision medicine platform of the future. This platform is shown on Page 22. It has a number of essential components which have to be brought together in order to have maximal impact. A very important component, molecular patient databases. These databases are fundamental requirement to understand the molecular mechanisms of disease, and thus, lay the foundation for precision medicine approaches or early validation of any novel target-driven approach. Connecting molecular patient profiles with clinical metadata redefines health and disease on the basis of molecular profiles rather than symptoms. Secondly, we have built an industry-leading iPSC-based drug screening platform, which can model diseases in many different cell types and even more diseases. Patient-derived cell-based assays are crucial to more accurately model disease than it is currently possible in rodent cells or rodent models. That's why…

Thanks, Cord, and good afternoon to everyone on the call. On Page 28, 2020 was an extraordinary year in which -- in many respects. So it's a real pleasure to share with you some of the key highlights and achievements of the year, and perhaps more importantly, some of the key steps we took despite the pandemic to put ourselves in the best position for continued and further growth in 2021 and beyond. For some years, we've been recognized as industry leaders in highly integrated seamless working between scientific disciplines. We've now extended this to integrated R&D such that the traditional development considerations, such as biomarkers, human PK, translational biology, clinical planning, safety assessment, manufacturability and so on, are all taken into consideration during the iterative stages of design and discovery. We believe this high-value offering has strongly contributed to our continued growth of base business, 16% increase in revenues in this segment, through addition of new partners and extensions and expansions of existing relationships. Feedback is excellent. Our return rate of business is very high, around 90%. And inspired by these indicators of confidence, we made various commitments during 2020 to increase our capacity for further high-value businesses on our existing sites, thus creating operationally efficient expansion space all over the group, but particularly in the U.K., France and Germany. I'm particularly proud and excited about the development of Just-Evotec Biologics. The founding and original concept of Just was to create a disruptively agile, flexible and transformationally cost-effective method of biologics discovery, development and manufacture. Very few of us realized how prescient this would be in 2020. Consequently, Just-Evotec Biologics had a very good feel first year in terms of scientific development, such as with the development and publication of J.HAL, a unique AI-designed antibody library, as well as…

Thank you very much. With this, we go forward to Page 34. Here, you will see our ESG and sustainability report in a picture. And what you should notice that for us, terms like ESG and sustainability are no longer buzzwords that we have to mention on calls like this, it is for us a daily fully appreciated and lived reality. We are convinced about the fact that we are not only on this planet to save and improve the lives of patients, but also to reduce our footprint. And with this from 3 to 4 years ago, where we have been nowhere in our ESG reporting, but also in our awareness of the footprint that we can make as a company, we made a step function to lead this field of ESG reporting and also to lead this field of ESG awareness. Special thanks here to Volker, who did a lot of work in making us here a leader in the future. When it comes to Page 35 of this presentation, you should see our outlook. And what is important about our outlook is that we are building a long-term franchise and a long-term vision for this company. With this, to not only look at 1 year to come, but look at the full row that you see here. Nevertheless, 2021 will be great. We expect group revenues to grow in a range of €550 million to €570 million. This would, at unchanged exchange rate, compared to €565 million to €585 million. This assumption is based on the current orders at hand, foreseeable new contracts and the extension of contracts as well as prospective milestones that we are expecting this year. Evotec expects the adjusted EBITDA to grow to €105 million to €120 million. At unchanged exchange rate in…

[Operator Instructions]. First question is by Joseph Hedden of Rx Securities.

Congrats on the strong 2020 results. Just wondering if you could give us any guide on the longer-term expectations for your gross margin as revenue mix continues to evolve, especially with J.POD coming online in H1 and now a second European facility? And then staying on that topic, what the CapEx expectations given -- for 2021, 2022, given you're now planning J.POD in Europe? And is there any kind of financial support from other sources, perhaps European Governments, et cetera, that is supporting that?

Thanks, Joseph. On the third question, we are in very intense and very good discussions with multiple organizations at this stage to fully appreciate the disruptive power of this technology and also our intention to that, but we cannot comment in detail. But clearly, there will be support. I can already say this, yes. And on the second question, I'll hand back to Enno. But on the first question, let me tell you that what you see as gross margin today is, of course, if you look at the overall company, always volatile depending on how many milestones we achieve. But when you look at the overall gross margin for our base business and given the increasing revenue mix and the better revenue mix of the company, you will see gross margins improving going forward, especially also with the business lines that we have opened and are opening because they typically have even better gross margins than our historical business. And on the CapEx question, I hand over to Enno.

Yes. Thank you. Pleasure having you on the call, Joseph. So CapEx for 2021 basically will be twofold again. So we will have a normal CapEx, which is growing. Just maybe as a brief reminder, 2020, we in total had the CapEx around €100 million, €99 million to be precise. And this year or 2021, we will see a CapEx of roughly €40 million to €45 million in the range of the normal CapEx for expansion and growth of the organization. And then we will have ordinary CapEx in terms of a second stage of expanding the J.POD in the U.S., finalizing it and other expansions at the other side, which should be in the range of €75 million to €85 million in total.

The next question is by Falko Friedrichs of Deutsche Bank.

I have three questions, please. The first one would be on your diabetes beta cell project. Could you update us on your plan here over the next few months and the time lines for that project to the extent possible? Then secondly, on J.POD, could you update us on the go-live time lines for J.POD 1, when we can expect that to happen? And then on J.POD 2, when could this site be operational if you start setting it up now? And do you already have committed customer interest for that European facility? Or do you build it first and then try to acquire business? And then my third question is on your guidance. So when I look at your 2021 guidance, it implies fairly similar growth for revenue and adjusted EBITDA in constant currencies. Now in light of your ongoing expansion and investments, is that a pattern that we should expect for 2022 as well, so not too much operating leverage next year as well in light of these investments?

So thank you, Falko. Good to hear you, again. Long time no see, would be also great to see you sooner or later again, but that applies to everyone on the call here. On the fourth question that you raised on the guidance, you should not see this as a pattern. You should really see this as a very clear reflection of where we are today, but you should increasingly see more dynamic of our business going forward, as you can also feel it. And just if you look at Q4 alone, you see a glimpse of that momentum in the business right now. So that's just to that point. On your first question, if I may quickly comment. So we are fully committed, first of all, to our beta cell and all cell initiatives that we are doing on the platform at this stage. CureBeta is an amazing project that we are pushing forward, where we are exploring at this stage, multiple routes forward on different levels of, I would say, innovation degrees, for example, when it comes to devices and other aspects of the full treatment. And we want to go here for a leading approach in the industry. And at this stage, we are very happy that we have everything that it takes to bring this project forward on our own platform. At the same time, we are exploring also company formations, but also deal formations around our cell therapy efforts, which are ongoing and will continue to guide us through '21. But as I said before, everything is at full speed at this stage because all we need is on our own platform or in license from partners, for example, when we are exploring devices. J.POD 2 will be fully operational in the second half of…

The next question is by Charles Weston of RBC.

I'll kick off with three, please. First of all, can you give us some color on the progress of Exscientia. And specifically, after its recent fund raise, what that means to your balance sheet position and ownership value? My second question is more broad about how you think about managing your EBITDA progression? Clearly, the Execute side is growing strongly and has stable margins. And you decide to reinvest some of that cash into R&D. Some investors might want more EBITDA progression, some might want more R&D investment. So just can you think about how you manage this on a sort of go-forward basis over the next sort of 3 years, how much do you let trickle through? And then lastly, out of your guidance, could you give us a range of how much milestone you might -- or milestone payments you may expect to receive this year, please?

So Charles, thanks for the questions. The first question will go to Enno. The second question is a very simple answer because we are building a long-term value company. And with this, the short-term optimization of EBITDA would just not be the right service to our investors. And with this, we are investing into disruptive platforms, for example, HAL is a machine learning platform in antibodies when these technologies are ripe to be progressed forward or we are bringing PanHunter and PanOmics to the market when they are needed in the industry. So there is no, I would say, at this stage, tailoring of our EBITDA, for example, that we are handling around €100 million or whatever, it is a function of what is needed to make this company long-term successful. And it's, of course, fantastic that we are discussing this, not on a "closely breakeven situation". We are discussing this on a highly cash-generating platform. We are discussing this on a highly profitable company. And we are discussing this on a company, which has spent more money in R&D than ever before in 2020, and will spend more money in R&D in '21 because of this full commitment for our long-term plans. And that's really the answer to our investors who are fully supporting this, when you look at, for example, the endorsement of Novo or Mubadala, to build this long-term vision of a company that is profitable, but also invests in disruptive platforms. Sorry for the long answer, but it really goes to the heart of what we are building, and it's clearly not short-term. It is very long term. And when it comes to the guidance range of milestones, I think, you should see a year with more milestones since last year. That's the guidance I can give you. And at the other side, you should see milestones are defining our business. Milestones are volatile, will continue to be volatile and really should be seen as something where there's a massive upside in the company every year. But even if they would not come, this company would have a very strong year also from its EBITDA perspective. And I think that's the beauty of that. And on the Exscientia question, how we deal with this situation in general, I'll give over to Enno, but let me first mention that at this stage, we have more than 20 fantastic co-owning companies and not only one company, which is, of course, especially great because it was one of our first investments, that's Exscientia.

Pleasure to take over. And yes, I mean, we have seen the recent financing rounds, which so far do not change our accounting here significantly in that regard because we try to only account if profits are really recognized or realized at the end of the day. So there's no significant change in that regard right now.

So can I just ask a quick clarification then. What is the value you're holding in Exscientia now versus what it was before the recent fundraise?

So we have the balance sheet value, so to say, which is around -- or above €20 million.

But of course, if you have seen the latest round, you can imagine that there is some side in there.

Right. I mean, to be more precise, I mean, we have different effects here. On the one hand side, obviously, we have the core balance sheet value. But as we recognize this as at equity, obviously, the losses also go into this consideration, which cumulate over the time.

Understood. Sorry, just what is the post-money value of Exscientia? And how much do you own?

We own, of Exscientia, about 19% at this stage, but we are not allowed to disclose post-money valuations of this company, like we are also not allowed to disclose any post-money valuation of any other company that we own.

Next question is by Naresh Chouhan of Intrinsic Health.

On Just-Bio, when we spoke last year, I think you sold about 50% of the capacity, and that was on just two trains. Can you please update us whether you now have 6 trains up and running. I think that was the capacity, you could fit 6 into the Seattle plant. And if so or how much of that capacity has already been sold or whatever capacity you have that's up and running, how much of that has been sold going forward? And then for also on Just, WuXi a couple of days ago said that they can deliver biologic product for customers at $80 per gram. And that's in a 12,000 liter bioreactor. So they're increasingly able to produce cheaply, even -- I mean, obviously, not as small scales as Just but relatively small scales. Can you help us understand where you are on the cost curve on a program basis, just to help us understand how much of a differentiation you have versus some of the other players in the industry? And then on the Takeda RNA deal, is that an exclusive deal? Or can you work with other companies on RNA discovery? And if it is exclusive, then is it a fair assumption that we should see much larger mass doses than we've seen with, let's say, Bayer, for example? Just because you're adding a lot more value there?

So let me, on the Takeda deal, to illustrate this a bit, hand back to Cord. And Craig will then give you a bit more illustration on capacity and the buildup of Just. But one thing before I hand over. We clearly do not want to compete or be compared to capacity plays in biologics. That's not what we are building. We are building access in precision medicine. So that's why the -- it's like comparing apples and eggs in a way or apples and pears, I think that's what you say. But I'll then hand over to Craig on that. But first, Cord on Takeda.

Yes. So thank you very much for the question. And the very simple answer is, it's clearly not an exclusive deal for Takeda. Actually, on all of these platforms that I mentioned, we only give exclusivity away on targets where we create upside to basically our co-owned pipeline. So it's only exclusive as for the specific target that we jointly progress, ultimately. And I mean we're very confident that you'll see other examples of deals here in this space on small molecule RNA targeting in the future.

Thank you. Craig?

Yes. Okay. Thanks, Cord. In terms of the trains and capacity, just to make one precision. So the whole J.POD building in Seattle and indeed our plants for the second one, you're right that the footprint is able to accommodate up to 6 trains. But the initial construction has a commitment and CapEx commitment and so on, associated with the first 2 trains, so that we can build out as demand builds up in effect. And that's actually one of the design concepts behind it, is that one can create capacity rather flexibly and on demand and in a very rapid manner. In terms of capacity, which is booked, those 2 trains at J.POD 1 are pretty much 90% booked out deep into 2022, which is also part of the reason why we feel reasonably -- we were very confident about our pipeline flow and deal flow and volumetric consumption and capacity utilization. And then if -- at the appropriate times, we can add additional trains rather rapidly in fact. And then just to build on Werner's comment about sort of cost per gram and volumetric production. So of course, the whole design concept behind the very integrated end-to-end view in Just is that the J.POD is just the end result of a series of very intensified process investigations and improvements to give rise to grams per liter per day as continuous bioprocessing. And that completely transforms how rapidly it can be set up and what scale can be produced in a short period of time. And we believe that offers a really premium and needed offering in the marketplace.

So sorry for not being precise on the per gram costing here, but that's -- again, it would be not guiding you to the right concept at this stage.

The next question is by Victoria English of MedNous.

I have three rather broad questions. The first concerns the concept of partnered pipeline. Werner, could you tell us what happens when a product that's been partnered reaches a pivotal stage? Do you then take a decision as to whether to drop out and take your profit? Or do you wait for the product to go on to the market? What is the strategy? The second question concerns the statement about symptomatic versus molecular profiling. I'm wondering -- what bothers me here is the concept that you can mechanically or biologically determine the cause of the disease without maybe consulting the patient, which is normally what I think of when you talk about symptomatic. Is there a way to capture real-world information into your model for molecular profiling? That's the second question. And the third question, again, is about the precision medicine platform and the concept there. And the question is, do we really understand enough about disease resistance to be confident that we know what to target?

So fantastic questions. Thank you so much, Victoria. Questions 2 and 3 will go to Cord. But unfortunately, he will have to be brief because this will take a full lecture. But the simple answer on your first question is, I think, briefly given because the strategy of the company to build the largest or one of the largest royalty ever. So with this, we want to be part of the journey of a drug, but we typically do not sponsor clinical trials and we do not run clinical trials. We don't have the capacity for that. So that's why for us, the pivotal point is to hand over drugs latest once the running of clinical costs of clinical trials would have to be financed to our partners and then keep our ultimately royalty shares in these projects. And that's also why we can leverage this platform not only with one partner, but with multiple partners in the industry. And that's why we are building, so to say, this co-owned pipeline out there. And that's hopefully answering your first question. And to questions two and three, back to Cord.

Yes. So thank you for your questions. So I'm going to try and keep it short. But in -- the essence of this is that the symptoms and how the patient feels, ultimately, of course, will stay to be an important part of the process of diagnosis. But ultimately, dementia, for example, can be caused by many, many different causes, including inflammation, but also an infection and God knows what. And ultimately, it is ultimate -- it is molecular profiles that will decide what are the causes, the underlying causes, in the disease cell types. And it is only if you understand these molecular changes and the digressions that you can then specifically and precisely intervene with the causes. So it is really ultimately a -- the platform that we're talking about is ultimately a platform that really redefines diseases according to molecular profiles in individuals' tissues and cell types to really find the appropriate intervention points. So it doesn't -- I mean if you have a headache, the question is where is that ultimately coming from? What's the cause, right? And it is -- the symptom is just a symptom, that's just the symptoms. And the same is true in many areas. When you lose muscle mass, muscle wasting disease, there can be many different molecular causes. And it's important to identify the molecular -- underlying molecular cause and then intervene on the appropriate front there.

And then the business about resistance, that was the third question.

Yes. And -- I mean, the business about resistance is actually, even goes more on to the molecular level. In order to be able to target resistance, you have to not only understand what is the disease on a molecular level, but then you also have to see what changed during the disease process, progression that led to the resistance of a -- against a certain drug type. And that needs to be then not only on a cellular level, but you have to go down to the level of even -- have to have been changes in the protein that is usually targeted by this drug or is it just not expressed anymore, is it interacting differently. So this is actually taking it one level further, where you have to really understand on the detailed molecular mechanisms on, like I said, protein RNA DNA level to get -- to go after these.

Thank you very much. I have to cut short a little bit for time reasons only, but I'm more than happy to facilitate a deeper discussion here Victoria, if you want to go deeper. And with this, I'm asking for the audience, if there is another question in the room because we could take one more.

The next question is by Mohamad Vaseghi of Frankfurt Main Research.

So I just wanted to simplify my question and it's about small molecule for RNA targeting. Well, my simplest question is where exactly Evotec wants to go? I mean -- so in which indications?

I think that goes to Cord and is a very good and broad question.

Yes. Thank you for the question. So with these kind of platforms -- actually, let me start the other way around. As you can see, Evotec is very broadly investing into various areas -- or various indication areas. And here, in these indication areas, we're trying to work, in particular, with patient data and patient assay systems to identify molecular mechanisms that are directly associated with the disease process. And when you do this, you come across target candidates and these target candidates are sometimes targets that can be easily addressed or fairly straightforward to -- they can be addressed via small molecules, sometimes via antibodies. But sometimes, that's -- those modalities just don't work. And sometimes even antisense doesn't seem to be the right modality then. And then in those cases, where you basically feel like there is -- it's very difficult to target these molecular targets via more traditional means, then we resort to, for example, the small RNA targeting platform because there's just -- it's very difficult to get to this target in any other way. And that's sort of, as I said, that basically opens up target space that is less traditional, sort of what used to be the undruggable space. And therefore, it's -- we just use it in areas where we feel like, well, the more traditional means won't work. But here, we still have a tool to go after what we believe is the most disease-relevant target in a particular disease context.

Thank you. If there is no further question on the line, I would...

There's another question by Christian Ehmann of Warburg Research.

Just a quick one. Concerning the BMS project, a quick reminder that this originated from your iPSC pipeline, am I correct? And if so, is this rapid development indicative of the overall pipeline which you see for the progression through the clinical -- preclinical stages?

So thanks for the question. When you talk about our BMS partnership, I think it is worth mentioning that we have multiple BMS partnerships. The one that you're referring to is our iPSC partnership in neurodegeneration. But at the same time, there is -- many people don't have this that much on the radar. There is a massive collaboration in protein degradation in oncology together with BMS. And there are multiple other partnerships with BMS that we are currently running and bringing forward. So it's really an area where we have more than 5 large alliances ongoing with BMS at this stage. In the iPSC-driven neurodegeneration pipeline that you are referring to, we are very happy that with this partnership now ongoing for more than 5 years, we are progressing into the clinic this year, as Cord already mentioned. This shows you that from a basically target starting point to the clinic, we did this in an amazing time line with a degree of novelty, which is fantastic. And with this, we also are able to prove that with iPSC-derived targets, we do not only have a discovery concept, but also a clinical and with this product pipeline building concept. And of course, if you multiply the speed of here the first visible concept out of this pipeline, like the iceberg picture tells you, you will see multiple more assets coming out of this partnership into neurodegeneration on iPSC cells. And at the same time, you should appreciate the fact that our iPSC platform is not only targeted towards neurodegeneration, but also towards neuro-developed mental diseases, towards eye diseases, towards kidney diseases, towards heart diseases. So that's why the platform thought of bringing this into multiple indication areas is just at the beginning of what we are doing with this iPSC platform. And here to link this also to footprint and what we are doing, we are in the process of evaluating really the construction of a lighthouse of iPSC research here in Germany, which would then also give us the capacity to do much more than what we're currently doing in this field.

There's no further question.

Which is on the one hand side, a pity, because we love your questions. On the other hand, it's great because we have kept you now long enough on the phone line. And we want to thank you. We wish you all the best. We hope to see you being vaccinated soon. It is a great thing to be vaccinated, by the way. And with this, all the best. Bye-bye.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.