Welcome to our -- good morning. Good afternoon. Welcome to our Q3 Call. Resilient into the Future of Biopharma R&D. That’s how we titled this presentation, which we have uploaded to the Internet and you are welcome to join this call also with the presentation. Resilience is all about being able to overcome the unexpected. Our goal of resilience is to follow science and technology and thrive together with our partners. So you will see throughout this presentation, that resilience is not what happens to you. Resilience for us is, how react -- how you react to something, how you will respond to something and how you recover from what happens to you. I am here together with my team, which you see on slide number three of this presentation with Laetitia, with Matthias, with Craig and with Cord, and I want to thank them very much for driving resilience into our company stronger than ever before. If you go to page number five of your presentation, you see the highlights and I want to stress basically only highlights on our Q3. And if we reflect a little bit on this year, you see that we are growing strong again with the cyberattack in the rear mirror now. And when I say we grow strong again, reporting double digit growth of 14% on topline and 13% on bottomline, despite the cyberattack is a great result. More importantly, we are driving this company into the long-term future and here just a few events that highlight that. For example, a major collaboration in neurodegeneration together with BMS was started in 2023. For example, the continued validation of our Just-Evotec Biologics business, where we have an excellent pipeline building moment that we witnessed altogether here. The tech alliance with Sandoz, also an agreement…

Thank you, Werner, and a warm welcome to all of you for joining us today to delve into our financials for the past nine months. Slide eight, as depicted in this slide, we had very strong start to the year with revenues in Q1 2023 at €213.6 million, which is an implied growth of 30% versus Q1 2022. A robust underlying base business, as well as new strategic collaboration with Janssen and the expanded collaborations with BMS, have contributed to this excellent performance. In both Q2 and Q3, we confronted the repercussions of the cyber incident, which necessitated a brief shutdown in Q2 to safeguard our partners and stakeholders. This event resulted in missed opportunities of approximately €70 million. Throughout these challenging quarters, our drug discovery and development business were impacted. Despite these hurdles, we have persevered by expanding our operation and cultivating critical partnerships like the tech partnership between Just-Evotec Biologics and Sandoz. Our resilience was evident in our financial performance with Q3 group revenue approaching €200 million and nine months group revenue reaching €580.1 million, reflecting here again an increase of 14% compared to prior year. Moving to the next slide, I will provide here a summary of our selected balance sheet and cash flow details. Between December -- 31st of December, 2022, and 30th of September, 2023, total assets decreased slightly by minus €2.7 million to €2,254.5 million. There is a shift in the asset composition, reflecting the allocation of cash equivalents towards CapEx investments. Our stockholders equity as of September 30, 2023, decreased by €46.4 million to €1,140.8 million compared to the end of 2022. This change is attributable mainly to the net loss, resulting in an equity ratio of 50.6%, slightly decreased from the 52.6% reported end of last year. We still maintain a strong…

Thank you, Laetitia. If you go to page number 14 of this presentation, we want to highlight the paradigm shifting platforms are our key growth drivers. We are very proud of our end-to-end shared R&D service platforms. This is the foundation of stability into our long-term growth. This is the foundation of our quality services that we are delivering. But I already mentioned that our differentiated technology platforms are key drivers for our long-term and future success. This comes on top of our end-to-end shared R&D platforms, and if you look at this graph, you see the big drives that comes from PanOmics and from Just-Evotec Biologics, just to mention two platforms here. And this is why we often say we are just at the beginning of paradigm shifting platforms that will shape this industry. And if you go to page number 15, we are shaping this industry by pipeline building with PanOmics and other technologies throughout the industry. And please don’t forget, it is our long-term goal to build the largest royalty pool in the industry, through our partnered R&D model. The numbers that you see on that slide speak for themselves. The €15 billion in milestones are already contracted. The 8% to 10% royalties are already contracted. The milestones will come and will provide an important driver for profitability and profitable growth into the future. That’s why we are so proud of our partners, and the partnered pipeline that we are building here. This is enormously efficiently leveraging our R&D platforms into pipeline building efforts. And on page number 16, you see that when we are describing our pipeline building efforts, we often use this image of an iceberg, because you only see the top at this stage. And on the top, you see 18 projects in the…

The first question comes from the line of Kirsty Ross-Stewart with Citi. Please go ahead.

Hi there. Yeah. Kirsty Ross-Stewart from Citi on for Peter Verdult. Two questions from me, please. Firstly, you affirmed your double-digit revenue growth expectations for 2024 in your opening remarks, but the cyberattack this year has, obviously, depressed 2023 revenues. With that in mind, can you elaborate what is possible with respect to revenue growth for 2024 on a like-for-like basis, i.e., had the cyberattack not happened, and also, whether we should expect moderate or strong margin progression in 2024, just trying to better understand the revenue and EBITDA bridge to your 2025 targets? And then my second question, just ahead of your CMD next week, would you be able to give us a small preview, in particular, what do you specifically want to showcase over and above Just Biologics? Thank you.

So on the CMD preview, I will then hand over to Cord, who will give you a sneak preview into PanOmics, which couldn’t be more exciting. I can only say that. And when it comes to our growth into 2024, let me please apologize that we are not giving exact guidance right now. But I think by confirming our 2025 path forward, you should see two things. One, double-digit growth is for us possible through paradigm-shifting platforms like PanOmics, where you see, for example, a much higher than 15% growth happening. On our R&D shared platform services, we can see high-single-digit and sometimes close to double-digit growth, but this is not going much higher than that, because of capacity reasons that we don’t want to and cannot build at this stage. So that’s just that you should appreciate the fact that within the portfolio, some things are going much faster in their growth and others are on high single digit. And the areas that go higher in their growth, of course, where we have high degrees of automatization, high degrees of technology in all the areas where our tech stack is leveraged. When it comes to margin expansion, that will be and should be visible, because the goal is, of course, high profitable growth within Evotec and not just growth. So without also giving guidance here, you will clearly see a higher growth in profitability then on the topline in 2024. And I hope that gives you a bit of color. With this, I hand over to Cord on a sneak preview to the CMD.

Yeah. Hello, everybody. Good morning and good afternoon. We will -- what we intend to do next week during our Capital Markets Day is to give you a little bit of an insight how Evotec is positioning itself in the area of precision medicine, which is predominantly through our efforts in PanOmics. PanOmics is essentially our way of incorporating Omics technologies into the drug discovery process from the very beginning to all the way into the clinic and potentially even the market area in terms of biomarkers, developing novel biomarkers. And there will be -- we will talk about some of the key components of our PanOmics platform, which includes, for example, our molecular patient databases and how we leverage them into target ID, target selection, but also into the discovery of disease signatures, molecular disease signatures and patient stratification. We will talk about, in particular, patient derived disease models using our iPSC platform and we will also talk about AI machine learning technologies that we incorporate throughout the drug discovery value chain.

Thank you so much. With this, we go to our next question, please.

The next question is from the line of Charles Weston with RBC Capital Markets. Please go ahead.

Hi, Charles.

Oh! Thank you very much for persevering. One question on the short-term and one on the longer term, please. In the short-term, the effective guidance, I think, for Q4 is EBITDA of €10 million to €30 million. I will just keep going over the operator. So, it’s quite a large range. And I just wanted to understand why it’s so large and whether the change in accounting to remove the cyberattack cost means that the underlying EBITDA expectations may have come down a bit from the last time that you updated the market. I will ask my second question later, if that’s okay.

So, no, there is not a come down of our expectations. It’s exactly what we wanted to communicate. We have just decided to really give a true and fair view by factoring out what external costs of the cyberattack are. And coming to your wide range, you are absolutely right, of course. But if you follow us over the long time, which you do, that milestones are typically happening in the fourth quarter, where many people are finishing up experiments, are handing forward experiments. So that’s why individual milestones can come and can influence Q4. Having said that, we have -- we are very secure on our guidance, even if there would be a low level of milestones coming in this year and that’s why, I think, we are with many eyes already in 2024 and are closing out Q4 in a very elegant way this year.

Understood. If I can just push you just a little bit on the change, appreciating that removing the external sort of cyberattack-related costs is perfectly reasonable to do, from an accounting perspective, but it provides an extra €12 million or so of EBITDA for this year, so does -- and you have kept the guidance the same. So does that mean that you would otherwise have been in the range, but perhaps towards the lower end? Is that what -- is that the signal that you are providing?

I will give it to Laetitia, but my short comment is, it really is one milestone here and there and everything is fine, but Laetitia, happy to comment.

Yeah. So as you mentioned, it’s important to keep in mind that this adjustment of €11.9 million reflects the fair view of our underlying performance and regardless of the treatment of this one-off cost -- external cyber costs, we expect EBITDA guidance to be met. That’s no question there. And regarding the €11.9 million, that’s the current cost that we have end of September, and of course, we have insurances that will play again in the total year.

Okay. All right. Thank you. And then my second question is just on the -- is on the Sandoz deal. The potential revenues here, which you highlighted when you announced the deal are very high, but I guess the revenue is going to ramp over time and there’s going to be some costs potentially coming in ahead of this as you add heads to be able to deliver on that work. Can you help us think about the trajectory of that revenue and EBITDA from this deal over the next few years, please?

Yes. Best is probably to hand over to Matthias for that question because Matthias was also really the man in the middle to create this tech partnership with Sandoz. So maybe you can elaborate.

Sure. Thanks, Charles, for the question. Good morning, good afternoon, everyone, also from my side. With regard to the Sandoz partnership, we are productively progressing and no change in guidance and dynamic as we communicated previously. We worked -- we started working on an accelerated timeline on a number of molecules, and as indicated in one of our last discussions that, the revenues that we indicated of €648 million, I mean, spread over a couple of years, reflecting typical biosimilars timeline and that we quickly get into the development process for these molecules. So we indicated at the time, we ramp up over, carefully said, three years over this period. So we are fully in line and no further change, Charles, at this point of time.

Okay. Thank you. So it’s around three years for the sort of development process there and maybe a slightly staggered start over this year and next year in terms of the beginning of the project?

So, yes. I mean, let’s say three plus, not to be too aggressive here, three plus, somewhat staggered, but that’s a model you can work with.

Thank you. That’s great.

And maybe -- if I may add one sentence, of course, these are biosimilars, where we think attrition rate will be very low when it comes to the biology. Obviously, biologics is really my question, where do we see the or where does Sandoz see the market opportunity, so that will probably then not lead to a full portfolio of all the biosimilars that we are making, but biology attrition rate should be very low.

Thank you, Werner.

Pleasure. We go to the next question and we hope that works a bit better on the operating level now?

The next question comes from the line of Pippa Pritchard with Morgan Stanley. Please go ahead.

Hi, there. Thank you for taking my questions. I just have two, please. So first question is on 2025 guidance for revenue of over €1 billion. How much of this is milestones, what is the probability adjustment and to what extent has biotech funding put some of these milestones at risk, for example, with the recent Exscientia pipeline reprioritization. And secondly, I was wondering if you could provide an update or some color on how the adoption of AI techniques has been across your client base? For example, what proportion of companies are outsourcing AI efforts now versus using their own internal resources? Where do you expect this to go and what would the triggers for this shift be? For example, would it be first drug to be approved using AI, technological barriers, et cetera? Any color you could provide on that and what you are seeing and what your expectations are into the future would be useful? Thank you.

So on the second question, I would like to highlight, again, our Capital Markets Day of next week and invite you for that, because that’s exactly kind of the discussions that we want to have and that we want to have on a broad basis with you. So that’s why maybe for now it would take too long to really fully answer that and I am happy to invite you to a discussion with Matthias, Cord and Craig to go deeper in this discussion, but again, the invitation to Capital Markets Day is for next week. When it comes to our revenue guidance and biotechs funding and the milestones that are attributed to that. We at this stage have a range of about €70 million that are, quote-unquote, the bridge to -- that are milestone driven in there. Having said that, going beyond the €1 billion on topline will be clearly possible also without milestones, but achieving our EBITDA is critical to achieve milestones, because as you know, milestones have high, high gross margins on them. That’s why I think on the topline, we are very comfortable and on the EBITDA guidance, that’s where milestones have to come in and will come in. And that’s why highlighting the €15 billion existing contracted milestones is so important because that’s not milestones where we still have to find partners to come to these data points, they are already there. Typically, we don’t have large milestones agreement with biotech companies in place. So, if you would go through the €15 billion contracted milestones that we have in place, I would say, less than 1% comes from biotech partnerships at this stage or maybe less than 5% comes from biotech partnerships at this stage. And that’s why biotech funding, and for example, programs or…

That’s absolutely fine. Thank you very much.

Pleasure. Next question, please.

The next question comes from the line of Michael Ryskin with Bank of America. Please go ahead.

Great. Thanks for taking the question. Can you hear me?

Yes.

Okay. Wonderful. So I have got two and I will -- maybe I will throw -- I will do the first one first. So first, I want to touch on the updated guide or sort of the maintained guide for fiscal year 2023 in light of your third quarter performance. So if my numbers are correct, it implies a little bit of a step down from 3Q to 4Q. I think the guide is at the midpoint, something like €190 million in the fourth quarter. So I am just wondering if you could talk about that a little bit more. I know there was always going to be some catch-up following the cyberattack. I think you talked about €30 million catch-up. So was all of that already captured in the third quarter, and so therefore, we should sort of think of that number and that pacing just, because if it looks -- if we look at it as is the fourth quarter implies, a pretty meaningful stepdown year-over-year, and certainly, sequentially. So just wondering what the drivers of that are?

So if -- so stepdown is clearly not what you will see in Q4. I think maybe we are a bit cautious here and cautiousness comes, especially throughout our development business, because the development business, which, quote-unquote, is somewhere between €150 million and €200 million total capacity, is the latest that was going fully online after the cyberattack. And we were basically not able to contract any business into the summer, because we didn’t know when to go fully online again and how this then translates into work completed and revenues recognized is probably behind the, quote-unquote, visible step down here, if it then is in our actual visible like that, I cannot fully guide you to that. But I think the development business is the key driver behind that and that’s due to the fact that up to mid-September, we were not fully sure when to fully start contracting business into development again. I hope that gives you color.

Okay. Yeah. That’s helpful. And then, somewhat related to that, I thought the pie chart visualization you had, I think, on slide 14 was really helpful, illustrating the growth from PanOmics and from Just, which is doing really well, obviously. But I also want to focus on just the Execute segment excluding Just, obviously, that’s been a little bit more challenged. I think I imagine that’s where a lot of the one-time impact of the cyberattack is, but even if you back that and its still roughly flat year-over-year. So I am guessing that’s where some of the, one, the development work you are talking about now is taking place, two, that’s where some of the market weakness and choppiness you talked about from biotech is going on. So I am just wondering if you could talk about that a little bit more sort of the business other than just Evotec and other than PanOmics, what are you seeing there and when do you think that can return to more consistent growth? Thanks.

Yes. Maybe on the second part of the question, I hand over first to Craig, who can give you really an operational view of where we are, and second to Matthias, who is out in our business development lines that you have also here better visibility. So maybe Craig first and Matthias second.

Yeah. Thanks. Thanks, Werner. Thanks, Michael, for the question. So in terms of the pie chart, your interpretation is right and your conclusion that, that would be where the main one-time hit of cyberattack is felt at its most heavy if you like. So -- and there are two reasons. There are two elements to it. So first of all, on the cost side, of course, the Execute segment as we report it carries the vast majority of the fixed cost of the group, the buildings, the people, the infrastructure and so on and we unable to transact on that for some weeks, of course, has a negative impact. And on the revenue side, and I should say, of course, because it’s fixed cost, you can’t easily adjust them in short-term. On the revenue side, even within what we call our base business, there are variable impacts at the point of sale. So some aspects of our business and the base business are multiyear, longstanding FTE-based contracts. And of course, those kind of contracts are quite resilient to the negative effects of being unable to do transactional work. But there are other aspects of our business mix, which are, in shorter cycles, such as Cyprotex, and indeed some aspects of the development business, as Werner said, where the cycles are measured in either days or weeks or months. And of course, those areas suffer very sharp deteriorations due to the cyberattack and it’s very hard to fully catch up. But to finish on where we are now, of course, since Q3, operations have been fully back to full service, albeit with some remaining drag in productivity due to sort of complexity of data handling, while we come fully out of the details of cyber. So, hopefully, that gives you a perspective on the operational side of the question. Matthias?

Thanks so much. Yeah.

Yeah and thanks for the questions to allow us a little bit to talk about the underlying market dynamics. Broadly, I mean, we showed significant growth in the demanding market. The demanding market, I would describe as we have seen a shift from what has been perhaps a bit more a seller’s market to a buyer’s market. Where we see, of course, if you look at our portfolio of partnerships with big pharma, mid-size pharma and biotech. That on the biotech side, we have seen muted demand given the low number of Series A, Series B funding. We definitely see that. And we have seen some budget tightening on the pharma side. So that’s why I think the market dynamics have shifted. However, it’s strong -- I would strongly note that the unmet needs, all the way to the patient, but also the need in the pipelines for innovation remains very high. So we see a series of very attractive partnerships that are constructed not only by us, but by others. So that’s why we would carefully take that buyers’ market dynamics, but buyers are out there. So one level down into the various types of businesses, as Werner has said earlier, and you have seen in the presentation, we see strong growth on the high technology driven, PanOmics driven type of partnerships. And then we see a spread of dynamics in Execute, some areas that are more commoditized and maybe more available, have more pressure, whereas we see very good positioning. So we have a spread of demand, but overall, we see a strong positioning of our services. And maybe to reiterate what Werner said on the development side. I think you will have noted that we just -- a couple of days ago, actually, just yesterday, we announced a partnership with Dewpoint Therapeutics, which is just a prime point on the value of this development platform for all the companies that want to accelerate towards IND and there are plenty. But then, of course, there are certain services that are much more commoditized and we, of course, have also seen how some CROs reduced their forecast very recently. So bottomline, more -- buyers’ market from a position of the buyers and we adjust, of course, our strategies, but we see healthy demand and as a foundation for our growth.

Laetitia, maybe an additional comment here.

To come into the financials and to answer to your questions on the Execute evolution end of September versus last year, we are still showing a revenue growth of 5% this year, end of September being at €380 million, and last year was €363 million. So we see here exactly what Matthias explained before that the market dynamic is under pressure, but we are having good progress and good long-term projects that fill our pipeline in the short term already.

Great. I hope this gives you color from multiple angles, and with this, we go to next question.

The next question comes from the line of Steven Mah with TD Cowen. Please go ahead.

Great. I have two questions. One on the cyberattack, and one on Just-Biologics. On the cyberattack, I remember you guys had a filing where you indicated there were some potential unknowns, which could impact costs in the future. Can you give us a sense for any potential additional costs related to the cyberattack or is that completely resolved? And then the second question on Just Biologics and apologies if you discussed it already, I was having technical difficulties, had to dial back in. But on Just Biologics, given the pipeline momentum, what are your thoughts for multiple J.POD beyond Toulouse or do you guys have enough capacity with Redmond and Toulouse? Thank you.

So on cyberattack and unknowns, I would say, we are really looking at the cyberattack as something in the rear mirror and have identified all topics, cleaning up all topics and that’s why I wouldn’t say that there are any unknowns open and left and we have started also to give cost dimensions behind it. So I would really take that out of the equation as an unknown and park that. On Just-Evotec Biologics, I probably first hand over to Matthias again.

Yeah. I mean -- thank you. I mean, at this moment of time, we have not planned for any J.POD beyond J.POD 2. That’s the short answer. Maybe to expand a little bit, because I think the observation -- I mean, I agree with your observation and we feel we see significant momentum on the basis of the validation we have now seen through recent deals from the biotech side, on the biosimilar side, on the public -- with the Department of Defense on the public side. We are now ramping up capacity feeding into the J.POD, also on the process development side. We are in multiple discussions with big pharma also in terms of really exploring the full potential of this technology. There will come a point to have that decision but it’s too early. So nothing to report beyond J.POD 2 and as we scheduled for opening later next year.

Maybe let me highlight one feature out of our Sandoz Tech partnership that, for example, Sandoz bought the option to potentially have access to the technology in their own S.POD, so to say, and that’s also something where we are, at this stage, exploring future ideas of where could the technology stack go and how could it go. What I think would be clearly a capital inefficient way of using this amazing technology is to build everything on our own. We really want to leverage this as well and high as possible into the future. I hope that gives you enough color, and by the way, great to hear you and regards to the U.S. And next question please.

The next question comes is a follow-up question from Charles Weston with RBC Capital Markets. Please go ahead.

Thanks for taking my follow-up. It’s on capacity and capacity utilization. I can see that you have only increased your headcount by about 2% this year. Obviously, you have had all sorts of issues to deal with. You have also talked about some cost mitigation efforts and delivering improved operating leverage. But can I just talk about capacity? Historically that might have been very much related to number of people. How are you thinking about your capacity utilization using the current number of people that you have and efforts to improve productivity? So should we expect an uplift -- a material uplift in in number of people next year, for example, to be able to deliver 2025 revenues?

So just to highlight one area here we are and have an exact number here, more than 200 open positions that we are at this stage trying to hire for our operations to execute on just Evotec Biologics alone in the U.S. and in Europe. So and that gives you one message first, that we look for the best people and not only for a quantity of people to deliver on our operations. The second thing is, yes, we have slowed down hiring, especially in the areas where we have commoditized competition also in in our fields that we see upcoming and we are really focusing on where can we leverage technology automatization with high quality people to do that. So that’s why the number of headcount shouldn’t be the only factor to see here how we are leveraging platforms and technology. When it comes to capacity, also here it’s a mixed picture throughout the whole portfolio, for example, that we are putting capacities together where we have subcritical sites. That’s a very clear goal also for our long-term value protection plan and efficiency plan, but that’s I think, what every decent business has to do. And when it comes to hiring of next year, I don’t have the full numbers here, but you will definitely see that we will look for more than 300 to 400 people in the whole platform and that shows you that there will be a close to 10% uplift in people capacity, but a higher than 10% uplift in revenues, and that’s exactly, I think, the matrix that we want to build here. Happy to go deeper into this.

Well, is it -- just a question on the 200 open positions for Biologics? Obviously some of them are quite specialized. Are you confident you will be able to find the people to be able to deliver on that that uplift in work?

Yes. Absolutely. Because people will love fully continuous technologies and love to be part of that paradigm shifting situation in the industry. And you wouldn’t believe it how people really stand there with stars in their eyes when they say, finally, I can now go to the high tech that I always wanted to be part of and that’s part of the attraction. So that’s why we are very confident in doing that. Last sentence on that maybe to Matthias.

No. And be assured we have a very tight process in place. We have, I think, a complete process underway on the recruiting side to tap into the talent pool. And also, to be clear, the input, the roles exist in the industry. So that’s why I think the love for this paradigm shift really plays out. So we are not looking for a new or unique breed of talent.

Great. I want to be mindful of all your time and know that many of you have a sharp stop at 4 p.m. or 3 p.m. wherever time zone you are. So that’s why, please all further questions, direct them to Volker or direct them to us directly. We are more than happy to come back to you. And before we close today, let me have a special thanks spelled out, because it’s so many people who are making quarterly reportings and who do this, and sometimes you don’t even hear them on the speaker. But with us in the room is Holger Scheel, who has been doing quarterlies together with us for more than 15 years now. And Holger will change roles and will then no longer be together with us in making these quarterly. But let me thank Holger wholeheartedly for 15 years of perfect quarterlies all together in one room here. Thank you so much, Holger. And with this, thank you to all of you and I hope to see you very soon and I hope to see many of you in person in Hamburg and tickets are cheap to Hamburg and food is excellent in Hamburg. So please come to the Capital Markets Day. All the best.