EVO

Ladies and gentlemen, welcome to the Evotec first quarter 2026 financial results and business update conference call. I am Moira, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Sarah Fakih, EVP, Head of Global Communications and Investor Relations. Please go ahead.

Thank you, Moira. Welcome to today's webcast and conference call. My name is Sarah Fakih, and I'm the Head of Global Communications and Investor Relations at Evotec. Please allow me to introduce today's speakers. Joining me on the call are Christian Wojczewski, Chief Executive Officer of Evotec, and Claire Hinshelwood, our Chief Financial Officer. Our Chief Scientific Officer, Cord Dohrmann, will be available for the Q&A session. Please note that this call is being webcast live and will be archived in the event calendar on our website. Before we begin, a few forward-looking statements. The discussion and responses to your questions on this call reflect management's views as of today, Wednesday, May 6, 2026. During this call, we will make statements and provide responses that state our intentions, beliefs, expectations, or projections regarding the future.

These statements constitute forward-looking statements within the meaning of applicable securities laws. They are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied. Evotec disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. For further information regarding these risks and uncertainties, please refer to our public filings and disclosures. With this, let me hand over the call to Christian.

Thank you, Sara. Good morning and good afternoon to everyone. Thank you for joining today's call. In the first quarter of 2026, we advanced Evotec's value creation levers, most notably with the initiation of the Horizon business transformation, which calibrates the company across the three pillars of operational excellence, science leadership, and commercial execution. As communicated during our full year 2025 results on April 8, we expected a strong year-on-year comparison for the Q1, considering one-time revenue in the previous year quarter as well as continued softness in the early drug discovery market. In addition, we have started execution of the Horizon plan, which is designed to put Evotec on a path towards sustainable growth and greater profitability while navigating a still challenging market environment.

As such, the quarter's major business highlights were characterized by strong operational focus, important leadership enhancements, and positive commercial indicators that support the next phase of our transformation. Let me start with our Horizon initiative. During the quarter, we moved from announcement into implementation. We're making progress in the formal Works Council consultation processes across our European sites, as well as in the preparation for our footprint and organizational adjustment measures. These steps are laying the groundwork for a more focused operating model, improved cost discipline, and better alignment of our resources with strategic priorities. This operational progress was accompanied by targeted expansion of our leadership team to support execution. Following the appointment of Ashiq H. Khan as Chief Commercial Officer last month, we further strengthened operational leadership with the appointment of Ingrid Mueller to the management board as Chief Operating Officer.

Both roles will be instrumental in moving our transformation forward. On the commercial side, we see early signs of improvement in key leading indicators. Customer engagement has increased, and we have continued to build a pipeline of potential partnerships, which indicates our revamped commercial organization is already making an impact. Turning to the headline quarterly financials, group revenues came in at EUR 156.6 million, while adjusted group EBITDA was negative EUR 21.9 million. As mentioned before, this was primarily due to a challenging prior year comparison based on a one-off license sale in that quarter. Continued softness in D&PD demand and significant foreign exchange headwinds further enhanced the year-over-year step down.

We confirm our full year 2026 guidance of EUR 700 million-EUR 780 million or EUR 730 million-EUR 810 million at constant exchange rates in revenues and EUR 0-EUR 40 million or EUR 10 million-EUR 50 million at constant exchange rates in adjusted EBITDA. We continue to expect an improvement in both revenue and profitability over the course of the year, with performance weighted towards the second half. This improvement is driven by anticipated market and D&PD recovery, but also by increasing visibility across our strategic partnership pipeline. With respect to financial leadership, 2 weeks ago, we announced an orderly transition in the Chief Financial Officer role.

Paul Hitchin decided to step down from his position effective April 30, 2026, for personal reasons. I would like to sincerely thank Paul for his extraordinary dedication and the skill with which he helped set Evotec on a path of strategic change during a period of transformation. As of May 1, Claire Hinshelwood has assumed the role of Chief Financial Officer. Claire is with us on the call today, and I would like to extend a very warm welcome. Claire will ensure continuity in financial leadership and provide stability as we continue to recalibrate the company. Before I move into the detailed quarterly review, I would like to give Claire the opportunity to briefly introduce herself. Claire, over to you.

Thank you, Christian. Good morning and good afternoon to everyone. It's a real pleasure to be joining you today. I'm genuinely excited to take on the role of Chief Financial Officer at an important moment for the company. I bring more than 30 years of experience in senior financial leadership roles and built much of my professional foundation at Syngenta, where I held a number of finance positions and developed deep experience in global finance, business strategy, performance management, and governance within a strongly science-driven organization. Following that, I joined Novartis, where I worked across multiple regions, portfolios and regulatory environments, shaping my deep understanding of capital discipline, financial transparency and decision-making in a big pharma context.

Most recently, as group CFO of BMI Group, I led the transformation of the company's financial operations and delivered significant underlying improvements in its financial position during a period of particularly challenging market conditions. That experience strengthened my hands-on experience in managing change, stabilizing performance, and creating financial resilience. What attracted me to Evotec is its unique position at the heart of the life sciences ecosystem. This position is built on its well-established scientific excellence, a differentiated partnership-based business model, and the potential of cutting-edge technologies such as the highly innovative Just – Evotec Biologics platform, alongside the clear commitment to transformation through the Horizon initiative. As CFO, my priority is to ensure continuity and robustness in the financial leadership while supporting disciplined execution of the group's transformation agenda.

Looking ahead, my focus will be on strengthening financial transparency, supporting progress towards improved profitability and sustainable growth, and working closely with the management board and all colleagues across the organization to ensure that financial discipline underpins decision-making at every level. I'm very much looking forward to working with the team and to engaging with many of you over the coming months. With that, I'll hand back to Christian.

Thank you, Claire. On slide six, let me briefly follow with an introduction to Ingrid Mueller, who also joined the Evotec Management Board on May first as our new Chief Operating Officer. Ingrid joins us from CureVac and brings over more than 20 years of international senior leadership experience in the life sciences industry, including prior roles at Sanofi and Fresenius Kabi, where she successfully managed complex operational environments and large-scale execution and transformation topics. With her strong background across operations, strategy, supply, procurement, and R&D integration, Ingrid oversees Evotec's D&PD operations and plays a central role in strengthening cross-functional execution, delivery performance, and operational discipline. A key focus of her mandate is the implementation of the Horizon initiative, supporting improvements in quality, productivity, scalability, and cost control across the organization.

Turning now to slide seven and our most recent news flow, we continue to make progress across key partnerships in D&PD that reinforce a consistent theme: our ability to deliver high-quality outcomes at speed and through AI-enabled integrated platforms. This capability is increasingly critical across therapeutic areas and partner types, where execution speed, reliability, and scientific quality are essential. A good example is our public and global health work. Following engagements such as our collaboration with BARDA on Ebola and Sudan viruses preparedness, we received two new grants from the Gates Foundation to advance tuberculosis drug discovery and translational research, accelerating progress towards shorter, safer, and simpler tuberculosis treatment regimes. Both areas leverage our AI-enabled discovery and translational platforms to deliver rapidly and efficiently.

The same strengths show in our medical dermatology collaboration with Almirall, where the joint team nominated a first preclinical development candidate progressing from lead identification to preclinical candidate in just two years, significantly faster than typical industry timelines. This milestone validates the efficiency of our AI and machine learning-enabled end-to-end data-driven discovery and preclinical model. The program is now advancing towards IND with continued support through our INDiGO platform. Taken together, within public sector engagements, global health initiatives or pharma partnerships, these examples demonstrate the speed, efficiency and quality of our D&PD platforms. With this, let me hand back the call to Claire for an overview of our financial results for the first quarter of 2026.

Thank you, Christian. Turning now to slide eight, which shows our condensed income statement for the first Q1 of 2026. Group revenues for the Q1 of 2026 amounted to EUR 156.6 million, representing a decrease of EUR 43.4 million or 21.7% compared to the same period in 2025. On a constant currency basis, Q1 group revenues decreased by 16.6% to EUR 166.9 million. Group revenues were impacted by the continuous market softness for early clinical discovery, as well as the non-recurrence of a $25 million license sale to Sandoz in the first quarter of 2025, as well as negative foreign exchange effects, for which I will go into more detail on the next slide.

Looking at the segments, revenues in D&PD decreased versus prior year by EUR 20.7 million or 14.7% on a reported currency basis to reach EUR 119.9 million, reflecting the mentioned challenging market environment and FX headwind. Accordingly, at constant currencies, D&PD revenues declined by 10% to EUR 126.6 million compared with the prior year period. Just – Evotec Biologics revenues decreased by EUR 22.6 million or 38% to EUR 36.8 million in the first quarter. The decline was primarily driven by the non-recurrence of the $25 million Sandoz license sale in the first quarter of 2025, as well as the expected decline in DOW revenues, which were offset by the year-on-year growth of non-DOW, non-Sandoz revenues of approximately 50%.

On a constant currency basis, revenues in the segment amounted to EUR 40.4 million. R&D expenses totaled EUR 10.1 million, representing 6.4% of total revenue, compared with EUR 14.9 million or 7.5% of total revenue in the first quarter of 2025. While continued investment in our technologies and platforms remains a core part of our strategy, spending in the quarter remained tightly focused on projects most relevant to our partners. Adjusted group EBITDA for the first quarter of 2026 amounted to a negative EUR 21.9 million, compared with EUR 3.1 million in the prior year period. It totals negative EUR 18.9 million at constant exchange rates.

At the segment level, adjusted EBITDA in D&PD decreased by EUR 2.9 million to negative EUR 9.8 million in the first quarter. At constant exchange rates, adjusted EBITDA amounted to negative EUR 5.5 million, broadly consistent with quarter 1 2025 EBITDA levels, despite the aforementioned lower revenues in the segment, reflecting the impact of reductions in our structural cost base and business mix. Adjusted EBITDA in the Just Evotec segment decreased by EUR 22.1 million to negative EUR 12.1 million or negative EUR 13.4 million at constant exchange rates. The primary driver to the year-on-year change reflects the non-repeat of the Sandoz license payment. On slide 9, let me go into more detail on the year-on-year movement in revenues by isolating the main factors that impacted performance in the first quarter.

Compared with the first quarter of 2025, the decline in reported revenues was driven by three main factors. First, the negative FX effects, which were a meaningful headwind of EUR 10.2 million in the quarter, driven primarily by the U.S. dollar and the British pound. Second, the non-recurrence of the $25 million or EUR 23.1 million Sandoz license payment that was recognized in the first quarter of 2025 in the Just segment. Third, a continued softness in the D&PD demand, reflecting the expected challenging market environment. When adjusting for these effects, the underlying development is significantly more moderate. Excluding both foreign exchange and the non-recurring Sandoz license, group revenues declined by 6%.

Accordingly, at segment level, the Just – Evotec Biologics results shows continued underlying momentum, with revenues increasing by 11% when excluding the Sandoz license and currency effects, absorbing the expected decline in DOW revenues. As already stated, in D&PD, revenues declined by 10% on a constant currency basis. Turning to liquidity and the balance sheet on slide 10. Total liquidity in the first quarter of 2026 stood at EUR 444.8 million, representing a quarterly decrease of EUR 31.6 million compared with EUR 476.4 million at the end of the fourth quarter 2025. The balance sheet remains solid, with the group continuing to hold a net cash position at the end of the quarter. The development in liquidity reflects a number of underlying dynamics.

First, we saw favorable year-on-year movements in working capital, which supported an improved operating cash flow compared with the first quarter of 2025. Second, capital expenditure remained disciplined, resulting in lower cash outflows versus the prior year. Third, it is important to note that the reported liquidity excludes the expected gross proceeds of approximately $100 million related to the Gilead acquisition of our EVOequity portfolio company, Tubulis. We expect to receive these cash proceeds in the second quarter of 2026, which will provide a further strengthening of our liquidity position. With that, let me hand back to Christian.

Let me now turn to Horizon and provide an update on the progress we made during the first quarter, shown on slide 11. Horizon is designed to accelerate growth and promote agility by streamlining the organization around the three core pillars: operational excellence, scientific leadership, and commercial execution. Since its announcement on March 10, Horizon moved from planning into active implementation with progress on the people and footprint-related measures. These actions are central to establishing a streamlined operating structure and improving cost base, centralizing technologies, and strengthening capabilities critical to our strategy. In the United States, we are progressing well with the e-exit of the Framingham site as we are consolidating our U.S. operational footprint. Across Europe, implementation is progressing, and we expect the majority of legally mandated Works Council consultations to be completed mid-2026.

First, personnel adjustments in Europe are expected to start within the third quarter of this year. In the first quarter of 2026, we recorded EUR 75 million of reorganization cost provisions directly attributable to the Horizon restructuring measures. These mainly reflect personnel measures, including severance payments, as well as impairment losses on property, plant, and equipment, and are based on estimates that are regularly reviewed and refined as implementation progresses. As previously communicated, we continue to expect structural run rate savings of approximately EUR 75 million by the end of 2027, with around 20%-30% of these savings expected to materialize in 2026. Building on the strategic recalibration established through Horizon, we're taking a broader look at the group to ensure that our structure and positioning reflect the intrinsic value of our platforms and portfolio.

Horizon fundamentally transforms how we operate, allocate capital, execute scientifically and commercially, and compete more effectively in our markets. With this optimized foundation in place, it's the right time to conduct a strategic evaluation to assess how the value being created through this transformation is most effectively realized within the corporate structure of the company. This includes our portfolio, capital structure, and ownership framework. As customary in such processes, the evaluation is being conducted with the support of experienced external advisors. There is no predefined outcome, timeline, or commitment to pursue any transaction, and we will provide further updates if and when appropriate. Let me now turn to slide 12, which provides a perspective on commercial momentum in the D&PD business. The 1st quarter of 2026 shows a continuation of positive signals we began to observe already in the second half of last year.

Importantly, selected indicators are stabilizing or improving compared to early 2025. Starting with delivery stability, the decline in negative change orders we saw throughout 2025 and into early 2026 continued through the end of the first quarter, reaching levels below those recorded at the end of Q4 2025. This points to an increasingly stable delivery environment and higher customer confidence and investments. Moving down the funnel, proposal activity and Discovery & Preclinical Development reached the highest level of the past 12 months at the end of the first quarter. This suggests improvement in commercial outreach and higher levels of customer engagement over the past year. These upstream indicators are complemented by continued progress in our execution metrics.

Proposal turnaround times in Discovery & Preclinical Development improved further and reached levels below the average number of days in 2025. This improvement reflects increasing efficiency in internal processes and better coordination between commercial teams. At the end of the funnel, net sales orders in the first quarter of 2026 remained broadly stable compared with Q4 2025. When viewed in combination with a reduction in negative change orders, the overall trend is positive. At the same time, net sales orders increased by approximately 15% year-on-year. Given Evotec's business model, revenues are influenced by strategic partnerships and milestone-driven activities, which by nature can lead to timing-related volatility rather than linear quarter-to-quarter progression. We're seeing a range of activity and maturing discussions, spanning collaborations with pharma partners on opportunities around the out-licensing of differentiated biological targets, as well as access to our molecular patient database.

While these discussions are at different stages, their breadth reinforces our confidence in the strength of our D&PD platforms and supports a more positive outlook as the year progresses. Overall, the commercial transformation is progressing as planned. While it's still early, these metrics give us increased confidence that we are seeing initial signs of stabilization. Before we turn to your questions, on slide 13, let me briefly summarize the key takeaways from today's presentation. As expected, our financial results in the 1st quarter of 2026 fell significantly compared with the same quarter last year due to a number of factors that we do not expect to persist into the rest of this year.

As we begin the implementation of Horizon, we expect to begin seeing impacts in the latter half of 2026, with 20%-30% of the estimated structural run rate savings of EUR 75 million being realized in 2026. We have already taken significant strides in implementing Horizon by strengthening our leadership in key commercial and operational roles, progressing our footprint reduction plans, and improving our commercial execution. Relevant to this last category, we have seen multiple leading indicators trending positive and expect to see the downstream effects of that early activity in future quarters. Our recent progress in drug discovery and preclinical development collaborations reinforces a consistent theme, the ability to deliver high-quality outcomes at speed through AI-enabled integrated platforms.

Whether in partnered programs such as dermatology with Almirall, global health initiatives supported by the Gates Foundation, or public sector engagement with BARDA, we continue to demonstrate that our D&PD capabilities can be applied across therapeutic areas and use cases where speed, reliability, and execution quality are critical. With a strong plan for transformation that is being implemented at pace, leading indicators showing increasing business activity into the second half of 2026, and a strengthened leadership team that is focused on putting Evotec on the path to strong, sustainable growth, we expect to see consistent improvements in our financial results across the coming quarters. With this, I would very much like to open the call for your questions.

The first question comes from the line of Swayampakula Ramakanth from HCW. Please go ahead.

Thank you. Good afternoon, Christian Wojczewski and team. Thanks for taking my questions. Just a couple of them. You know, as you're keeping your full year guidance, and, you know, it looks like there is, you know, if you maintain that, it looks like there needs to be a ramp up in quarterly revenues from here onwards, from the second to the fourth quarter. How confident are you that, you know, you can gain that ramp going forward? The second question is on the strategic review on the Horizon, just trying to understand how you're going to sequence it. Do you need to get the Horizon completely implemented when you're thinking about the strategic review of the group, or is that going to be parallel? Thanks.

Okay. All right. Thank you. I'll start with the second question. I'll hand over to Claire for the first and maybe take it back afterwards. On the Horizon topic, the answer is no. We know what we're executing against and what our plans are. As I said earlier, Horizon is upgrading our operating model, reducing complexity, and making us more agile. We know precisely what we have to do. We are not required to wait. First question, Claire.

Okay. On the full year guidance then, as Christian mentioned, as we were going through the introduction, the revenue of course is not linear because of the significant impacts that we see from milestones and strategic deals. If I take you back to a slide that Paul shared during the year-end presentation a couple of weeks ago. On that slide, he split down the dynamics that we were expecting for both half one and half two. On that slide, it outlined that for half one we would see, of course, the one-time negative impact from the Sandoz deal. We would expect to see underlying growth in the Just – Evotec Biologics, excluding the impact of DOW and Sandoz, which is what we've seen. We've seen up to roughly 50% underlying growth there.

We also highlighted that we would continue to see a challenging but improving situation in the D&PD environment, and we would have a negative FX impact. If you actually look at what the Q1 results show, it's very much in line with what that half one trajectory was expecting. When you look into half two, we start to see the impacts coming through on the strategic partnerships, and that's where we'll see the upturn. We'll also start to see the recovery of the D&PD underlying business. It's the dynamic of those large strategic partnerships and the milestones that are making the difference between what you see in the first quarter and when you look at the full-year outlook. Everything was in line with what we shared in that slide during the year-end presentation.

Okay.

Thank you very much, Claire. That is fantastic. Can I do a quick follow-up, please?

If you look at the gross margin, which was -1%, you know, it's kind of striking initially. But underneath it, I'm imagining certain things which Claire just talked about, whether it is the FX effect or the Sandoz effect. How much of that is true? You know, is there anything else that we should be thinking about? You know, what needs to get done so that, you know, our gross margin gets back into the positive territory?

I mean, all of what I won't repeat what I just said a second ago.

Yeah.

I think the other thing that you're going to see coming through, is as Horizon is implemented, then clearly there's an under-absorption that we see today in some of our sites that's having a drag effect on the margin. As we move forward with the Horizon implementation, then you'll start to see that significantly reducing, and that will then have a positive impact on the margin going forward.

Okay. Thanks. Thanks for confirming that.

The next question comes from the line of Charles Weston from RBC Europe. Please go ahead.

Hello. 2 topics, please, for me. The first is on D&PD and guidance. I think, as you said, your guidance anticipates an improvement in the underlying D&PD market in the second half. Additionally, you have visibility on your strategic relationships. Could you just help us understand your visibility in each, particularly, as the language you used, I think, in Q1 to describe the market seems a tad more cautious than the full-year results. Sorry for the length of the question, as part of that, could you give us some additional color on the order book? You talked about the number of proposals, could you also talk about the value of them?

Thanks, Charles. Maybe starting with the 1st topic. When you look at the D&PD business, the way that you obviously think about this is what you see in the 1st quarter revenues is the result of sales orders that were basically done or negotiated 9-12 months ago, right? Where we've been consistently talking about a soft market environment last year. Now, that's a result of last year. Going forward, I think the indicators I did mention here, 1st on the not strategic business, fewer cancellations, gives us more confidence that the biotech market is also recovering because there is more confidence in investing into projects.

Secondly, when you look at the sales orders, we've now seen actually the 3rd quarter in row, better performance compared to what we've seen Q1, Q2 last year. Q3 was better than Q2. Q4 was better than Q3, and the 1st quarter was also in line with the 4th quarter. That takes a bit of time to materialize, obviously, but these indications for us are strong signals that we're moving in the right direction. With regard to strategic relationships and partnerships, usually, obviously, that's more digital events, right? You negotiate and either you do a deal or not, or you do the deal now, or you do it 6 months later. There's no real KPI behind that. But we see that a lot of these discussions have been picked up again.

When they ultimately will be executed, you can't put it precisely into one quarter, Charles. Maybe, to put it also a little bit into perspective, when you look at the Q1 results, when I look at the D&PD business the last couple of quarters, and this is all published, quarter-by-quarter revenue swings last two years were easily in the range of EUR 10 million-EUR 20 million. Why is that? Also partially because of our business model. Strategic deals, milestone payments, license payments. Q4 25, for example, versus Q3 was 12% up. You look at Q1 versus the Q4 quarter was 13% down. The quarterly picture is not necessarily indicative of the full year results. The same is true for Just. There's even bigger swings, as you can imagine.

Now, with regard to the order book, that's not a number that we publish. But obviously you should assume that we have in 2025 consumed order book that was built in 2024. We're now starting to rebuild the order book, and there will be inflection point in the second half where the order book is also starting to grow. Sorry, lengthy answer, but I hope that this comes labor.

Yes, it does. I did actually have one other topic, but this is a much quicker one, please. Probably one for Claire. Can you help me understand the underlying profitability and the growth margin level at Just, please? Negative gross margin. I think you mentioned there was some cost phasing issues. How do we strip that out for an underlying view, and will those numbers actually reverse in Q2 and Q3 or Q3 for a tailwind? Thank you.

I'll hand this over to Claire in a second. Maybe let me give you 1 or 2 sentences upfront, Charles. I just gave you the volatility swings in D&PD. When you look at just quarter by quarter, just high level, the last 8 quarters, revenues 35, 40, 60, 40, 115, 37. You see on a quarterly basis, because of the business model, license payments, prepayments and so forth, it's a quite volatile profile. That also is true for the profitability, right? Depending on how we actually spend in preparation of a new deal, whether we actually get paid on a milestone basis or license basis. There is volatility. The Q1 is not necessarily very conclusive, Claire.

Yes, really just to build on what you said there, Christian, it really is the factor of the phasing between the cost and investment that we have and then when we're able to recognize and receive the revenue from whether it be the milestone payments or other income. It's really a factor of that phasing of investment versus revenue recognition, and therefore you see the volatility and the margin movement across the quarters.

Okay. Thank you for the color.

The next question comes from the line of Christian Ehmann from Berenberg. Please go ahead.

Hello, everyone. Thanks for taking my question. I would like to linger a bit on the H2 performance or guidance of that, if I may. Would it be fair to assume that because you mentioned something about the impact of strategic partnerships and milestones and royalties and so forth, would it be fair to assume that in your expectations to reach your guidance over the next 2 quarters for the full year, you would say that you see an improvement, so up from the -10% underlying now to the low single digit you have given us for the reported number for the full year.

Would it be fair to assume to say, okay, we would expect an improvement of or a turnaround to slight growth rates over the couple of, let's say in the beginning of H2, and to top it off, we would expect a partial contribution from milestones? Just want to get an idea how significant or how impactful those milestones would need to be to achieve the target. The second question is in regards to the, let's say order progression. Is there a seasonal pattern? When you say you have quarter-over-quarter flat development, Q4 to Q1, is this a usual pattern? Because obviously a downturn compared to the recovery we saw in the quarters before. The last question would be in regards to the new efforts from AI first companies.

Do you plan on giving us or the market more color on this, i.e. with a capital markets day or maybe an investor day? Thank you.

Good afternoon, Christian. Number 1, yes, it's fair to assume that we are assuming a slight underlying growth in the D&PD business towards the end of the year. It's also fair to assume that we are assuming strategic deals to contribute to that. It's also fair to assume that we have a list of opportunities here we're working on. All of your statements are correct. Basically, given that we have confirmed guidance, you can basically back-calculate what it means for a second half growth. On the second topic of order progression, can you shed a bit more flavor or light on what your question is behind there?

You mentioned to us that, Q3 was better than Q So year over year, Q3 was better than, 2025 was better than 2024. Q4, 2025 was better than Q4 2024.

Yeah.

Now, Q1 is flat compared to the Q4 2025, if I heard it correctly. It indicates to me a delay of improvement or recovery, or at least a flattening of the curve. Is that correct?

I see. Okay. I think the second part of your question was seasonality, right?

Yeah. Is there a usual pattern here?

First of all, when I look at Q1 order intake in D&PD versus a year ago, we're double-digit up. That tells you that it has been a good quarter in terms of new sales. It was also a good quarter for us in the fourth quarter last year. I think from a revenue profile perspective, the events around milestones have a bigger impact than the seasonality. There is some seasonality. We've seen the last couple of years that usually the fourth quarter is a strong quarter. That is probably the last 3 years. I would also not overemphasize the seasonality. The last topic was an AI-related topic. Please also specify a little bit the question around the companies that you mentioned.

You've given us some information about the increase of demand, let's say, for my first companies. Also in our last earnings call in the full year result, you mentioned in a side note that you've seen some improved demand of this type of customer base. Just to get an understanding and to give a little bit more meat on the bone of the potential impact of this kind of customers towards your long-term growth expectations, maybe. Is there an indication or plans, or are you entertaining the possibility to give us more details about how these kind of offerings that you give those customers might impact your forecast or your expected growth in the future? That can we get more of an inside idea how this actually could play out in the future.

I understand, Christian. Usually, we are not offering kind of a AI service line. Usually it's part of our drug discovery capabilities and platforms, so it becomes part of it. In the very specific case, and I think we talked about it last time, where AI companies come to us, what I can tell you is that, for example, our Cyprotex business has benefited from that most recently, and we expect this to further benefit. But it's not a number that we usually can single out, but because it's part of a package of a larger offering.

Thank you very much.

The next question comes from the line of Finn Schätzler from Deutsche Bank. Please go ahead.

Yes. Hi, and thanks for taking my questions. I heard your earlier comments on the Q1 performance, and that we should view the lower profitability during Q1 probably as more investments, maybe in anticipation of upcoming contracts and so on and so forth. If we summarize all your comments, is it fair to assume that Q1 was now the trough in operating performance? If we think about the second quarter, that both in terms of revenue and adjusted EBITDA generation, we should see first slight improvements. This would be helpful. My second question on the strategic review that you now initiate. I mean, you as a company, you've been approached in the past.

We read about individual shareholders, stepping up more recently and proposing some changes or, is it linked to simply operating performance? Any sort of thoughts you could share with us here would be very helpful.

Thanks, Finn. First of all, your first question, I think I just tried to lay out a little bit that the quarterly view is not always helpful with the swings, also with the profile that we have in terms of milestone payments. I'm not sure I wanna guide on individual quarters. We've never done that before. Important message is, we stick to our guidance for the full year, which means that the first quarter will be evened out over the next 3 quarters. With regard to the strategic review, I can say that this was not initiated in response to any inbound interest. It's a very logical timing when you think about what we're doing. We're resetting the company mid last year.

We've revised our long-term view, vision for the company towards tech and scientific leadership or positioning the competencies that we need. In March, we've announced Horizon, which basically defines our operating model to deliver that business strategy. That's now the next logical step.

Thank you.

We have a follow-up question from Charles Weston from RBC Europe. Please go ahead.

Hello. Thank you for taking my follow-up. I was listening to your previous answer where you said you weren't gonna give quarterly guidance, but I'm gonna ask perhaps again anyway. In particular around Q4. Q4, it's often a Q4 weighted year, just traditionally. Also you've got your market improvements expected, you've got the strategic revenues coming through, and you've got the Horizon savings. Could you perhaps give us some color on how Q4 weighted the EBITDA could be? Looking back the last couple of years, it was a loss for the first 3 quarters and a substantial profit in the 4th. Could that be the same or exacerbated even more?

Perhaps just wondered if you'd like to provide any color around what we might expect in Q2, whether there are any, you know, puts and takes in the comps that we might want to bear in mind for our modeling. Thank you.

Thanks, Charles. I think we iteratively approach, actually move from year to quarter. I won't do the quarter view, but I won't actually help you with a half year view. As you probably will remember, we've done that last time. It's really the dynamic difference here between H one and H two that Claire Hinshelwood was explaining. When you look at the changes for the second half, we did mention that we expect a further negative impact from the JEB licensing versus 2025. However, a positive impact from JEB growth, actually in the range of double-digit growth excluding DOW. There is a positive impact from underlying D&PD growth, where we set low single-digit growth in the base business. Strategic partnerships will add on top.

We also said that the FX effect will persist. That's our view, and we're not breaking it down further by quarter knowing exactly why, because the quarterly volatility is not helpful.

Okay. Thank you.

We will now take a text question coming from Brendan Smith from TD Cowen, saying, "Appreciate all the color on your end markets here. I wanted to first ask about the continued softness you mentioned in preclinical spending. Qualitatively, what do you think needs to happen for customers to really round the corner? We've continued to see pretty steady biotech funding recovery, some albeit early signs of AI efficiency gains across this sector. I guess I'm wondering if there's just a timing consideration here or if?

Okay, the sentence stops halfway, but I guess I get the question. We think it's a timing topic, as alluded to earlier. There's obviously two ways of looking at it. The funding situation seems to have stabilized in the last couple of actually months. From a biotech perspective, that's the external view. The internal view, I alluded to, cancellations have come down quite significantly. Some of the cancellations were more of scientific and strategic nature in the past, but some also where biotech companies have pulled off for other reasons. We've seen this decline also in the context of more confidence of biotech companies in funding. That's the internal view.

As alluded to earlier, we do not see AI as a structural or disruptive challenge to our business model because we are applying AI in order to accelerate drug discovery. We see this actually as a supporting tool in our toolbox.

That was the last question. I would now like to turn the conference back over to Sarah Fakih for any closing remarks.

Thank you, Moira. With this, we would like to conclude today's conference call. Thank you for your participation, and please feel free to reach out to the investor relations team should you have any further questions. Thank you and goodbye.

Ladies and gentlemen, welcome to the Fourth Quarter and Full-Year 2025 Financial Rresults. My name is Yusuf, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and that this conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and then zero. The conference must not be recorded for publication or for broadcast. At this time, it's my pleasure to hand over to Sara Faki, Head of Global Communications and Investor Relations. Please go ahead.

Thank you, Yusuf. Good morning, good afternoon, and welcome to today's webcast and conference call. My name is Sara Faki, and I'm the Head of Global Communications and Investor Relations at Evotec. Please allow me to introduce today's speakers. Joining me on the call are Christian Wojczewskii, Chief Executive Officer of Evotec, Paul Hitchin, our Chief Financial Officer. Our Chief Scientific Officer, Cord Dohrmann, will be available for the Q&A session. Please note that this call is being webcast live and will be archived in the events calendar on our website. Before we begin, a few forward-looking statements. The discussion and responses to your questions on this call reflect management's views as of today, Wednesday, April 8th, 2026. During this call, we will make statements and provide responses that state our intentions, beliefs, expectations, or projections regarding the future.

These statements constitute forward-looking statements within the meaning of applicable securities laws. They are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied. Evotec disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. For further information regarding these risks and uncertainties, please refer to our public filings and disclosures. With this, let me hand over the call to Christian.

Thank you, Sara. Good morning and good afternoon to everyone. Thank you for joining today's call. Let me start with the headline results for 2025 and the first month of 2026. 2025 was a year of significant progress for Evotec as we laid critical groundwork for the company's next chapter of sustainable and profitable growth. Throughout a persistently challenging market environment, we remained anchored in the strength of our science and the dedication of our teams, which continue to be the foundation of our performance. Building on these fundamentals, we introduced a new company strategy in 2025 that defined our priorities and now guides the transformation work underway in 2026 and beyond. Our four levers of midterm value creation, scientific leadership, operational excellence, better monetization of Just - Evotec Biologics, and capturing pipeline value have already translated strategy into targeted action.

As a result of this work in 2025, we have delivered more than EUR 60 million in annualized cost savings, streamlined our asset pipeline, and reduced our capital expenditure by around 60%, important steps that have strengthened our balance sheet and our financial resilience. Against the challenging market backdrop of 2025, financial results were at the high end of our guidance range, and Paul will go into more detail on that later in this presentation. Both segments of Evotec business have contributed to our progress in the past year. In Discovery and Preclinical Development, continued clinical advancement across partner programs delivered milestones and underscored the productivity of our platforms despite continued softness in early-stage biotech funding. Just - Evotec Biologics delivered a breakthrough year supported by the landmark agreement with Sandoz and continued progress across global health programs.

Last month, we kicked off our Horizon initiative, a comprehensive transformation of our operating model. We are already making substantial progress across the three Horizon pillars of operations, science, and commercial execution. The last of which recently saw the appointment of a new chief commercial officer, reinforcing our commitment to building a more agile, customer-focused organization. As Horizon implementation continues, we expect to see the first structural and financial benefits in the second half of 2026. Turning to the progress in our discovery and preclinical development segment on slide five, we saw robust clinical and scientific advancement over the past 12-18 months across key therapeutic areas, including oncology, neurodegeneration, and kidney disease, as well as exciting developments in emerging modalities such as condensate modulation. During this period, and as already reported during our Q3 results in November 2025, two partnered assets moved into phase II clinical studies.

Since then, a partnered preclinical asset advanced to a first-in-human phase I study, bringing our partnered clinical portfolio to a total of two programs in phase II and five programs in phase I. Let me briefly highlight the progress within some of our key alliances. In our cancer protein degradation collaboration with Bristol Myers Squibb, we are jointly developing a broad pipeline of next-generation molecular glue degraders, a revolutionary modality with the potential to target previously undruggable disease-causing proteins in an area in which BMS is the clear industry leader. The first candidate progressed from IND acceptance in November 2025 into a phase I clinical study in March 2026 in advanced clear cell renal cell carcinoma, the most common form of kidney cancer. These advancements, which validate the strength of our screening and AI-supported analytical platforms, resulted in milestone payments of $5 million and $10 million respectively.

In our neuroscience partnership with BMS, we achieved continued progress across a jointly developed preclinical pipeline focused on therapies for neurodegenerative disorders, triggering a $25 million milestone payment in October 2025. Lastly, in our kidney disease partnership with Bayer, a phase II clinical study in Alport syndrome, a rare genetic kidney disease, was initiated in December 2025, underscoring our discovery and translational capabilities in renal conditions. The momentum across these collaborations highlights our ability to translate our outstanding science into successful clinical. It validates our platforms and carries through on our fourth strategic lever, capturing pipeline value as assets advance to generate meaningful financial upside. Looking ahead, we expect the total number of assets in phase II to have grown from two to four during 2026. Turning from our small molecule business to biologics, let me give you an overview of our Just - Evotec Biologics segment on slide six.

2025 was a breakthrough year for JAB, defined by a strategic pivot away from a capacity-constrained manufacturing model toward an asset-lighter, technology-focused partner enablement model. This evolution, centered on our highly differentiated continuous manufacturing platform, is reflected in the news flow throughout the year, featuring technology-enabled partnerships and significant progress in global health programs. However, the defining milestone for JAB was the completion of our strategic agreement with Sandoz, which closed in December 2025. The agreement is valued at $650 million with additional royalty potential for 10 biosimilars, the six most advanced of which have an originated value of about $92 billion. Further recent developments include a multi-year BioMaP-Consortium award of up to $10 million from the U.S. government's Biomedical Advanced Research and Development Authority. The program aims to optimize the biomanufacturing of monoclonal antibodies against Ebola and Sudan viruses, strengthening preparedness for hemorrhagic fever outbreaks.

In January 2026, we also expanded our long-standing collaboration with the Gates Foundation, receiving a new grant supporting 10 new molecular design projects over the next three years. These projects apply our AI and computation-driven JMD platform to improve antibody developability and advance access to affordable biologics. Taken together, these advances show how JAB is evolving into a high-margin, technology-driven business with durable long-term value creation potential, firmly validating JAB as a core pillar of our future growth ambitions. Let me now hand over the call to Paul to walk you through our financial results.

Thank you, Christian, and a warm welcome from my side as well. On slide seven, you can see our condensed income statement is in line with the preliminary unaudited financial results we provided as part of the Horizon communication on March 10th, 2026. For the fourth quarter of 2025, group revenues increased by EUR 32.1 million or 14.5% to EUR 253.3 million. For the full-year 2025, decreased by EUR 8.6 million or 1.1% to EUR 788.4 million compared to the same periods in 2024. On a constant currency basis, Q4 revenues grew by 21% and full-year revenues grew by 1.7% compared to 2024. While the broader CRO market showed early signs of recovery in 2025, the environment for early-stage drug discovery remained challenging.

As a result, the full-year revenue decline was primarily driven by lower revenues in our DMPD segment, where revenues declined by EUR 27.3 million or 16.6% to EUR 137.1 million for the fourth quarter and by EUR 82.5 million or 13.5% to EUR 528.9 million for the full-year compared to the prior period. Unfavorable foreign exchange movements represented an additional headwind to full-year revenues of 2.8%, driven by the U.S. dollar and British pound. However, those effects were largely offset by strong performance in the Just - Evotec Biologics segment, including the positive contribution from the Sandoz transaction in the fourth quarter of 2025. Revenues within Just Evotec increased by EUR 59.4 million or 104.2% in quarter four, and by EUR 73.8 million or 39.8% to EUR 259.4 million for the full-year 2025 compared to 2024.

This growth was driven by the continued progress in the Sandoz partnership, including an incremental contribution from a license payment of approximately EUR 65 million in the fourth quarter. While revenues from the U.S. Department of Defense-related activities declined in the second half of 2025, following announced budget cuts, revenues of our non-Sandoz and non-DoD customers continue to grow by more than 60% in the full-year. Fourth quarter costs in Just - Evotec were temporarily elevated versus the underlying run rate, driven by additional expenses associated with the Sandoz transaction and temporarily higher material costs, both of which are expected to normalize early 2026. In line with our guidance, R&D spending decreased further and amounted to EUR 37.5 million or 4.8% of total revenues for the full-year 2025, compared to EUR 50.9 million or 6.4% of total revenue in 2024.

Investing in our technologies and platforms remains a core part of the strategy, and we will continue to allocate capital to scientific capabilities and technology leadership while maintaining a balanced investment approach in a challenging macroeconomic environment. Adjusted group EBITDA increased by EUR 29.5 million or 103.6% to EUR 58 million in the fourth quarter, and by EUR 18.5 million or 81.9% to EUR 41.1 million for the full-year of 2025 compared to the same periods in 2024. Adjusted EBITDA in the DMPD segment decreased by EUR 12.6 million to EUR 6.8 million in the fourth quarter, and by EUR 24.7 million to -EUR 12 million in 2025. Primarily driven by the aforementioned lower revenues, which contracted faster than the cost base, creating internal overcapacity and weighing on segment profitability, underscoring the need for the operational transformation program recently announced as part of Horizon.

Adjusted EBITDA in the Just - Evotec segment increased significantly by EUR 22.1 million or 463% in the fourth quarter, and by EUR 43.3 million or 443% to EUR 53.2 million in 2025 compared to the prior periods. This strong result reflects continued progress in the validation of our continuous manufacturing technology, as well as favorable shift in revenue mix towards higher margins and an asset lighter technology enablement model. Turning to liquidity and the balance sheet on slide eight, we closed 2025 in a solid position. At year-end, cash liquidity stood at EUR 476 million, representing a strong balance sheet with a net cash position.

The improvement in our cash liquidity reflects disciplined financial execution, including the monetization of technology leadership through Just - Evotec Biologics, the realization from maturing equity stakes, including the upfront payment from the sale of our minority stake in Dark Blue Therapeutics, and our continued shift toward a capital-efficient operating model with CapEx spend reducing 38% year-over-year. Importantly, we enter 2026 with no active financial covenants, providing us with a high degree of financial flexibility. Now let me hand back to Christian, who'll provide an update on some of our key revenue impacts.

Thank you, Paul. To further contextualize our 2025 results and frame the trajectory into 2026 and beyond, let me briefly address one of our key strategic levers, our long-standing partnership with Bristol Myers Squibb. From 2016 to the end of 2026, our two BMS collaborations in urology and oncology are expected to have generated close to EUR 800 million in cumulative revenues. At their peak, they accounted for more than 20% of group revenues, making BMS one of the most significant and successful strategic relationships in Evotec's history. With this partnership, the oncology collaboration today represents a larger contributor to BMS-related revenues. As illustrated on slide nine, it has evolved through distinct phases, from platform build-out to expansion, and now into portfolio maturation. These phases are characterized by alternating periods of investment and harvest, which are naturally reflected in corresponding changes in revenue contribution.

Since the peak in 2023, revenues from the oncology collaboration have declined by more than a third over the 2023 to 2025 period. This reflects a shift into a renewed investment phase focused on molecular glues and areas of exceptionally high scientific and commercial potential. While this transition has temporarily increased cost intensity and weight on DMPD profitability, it does not signal a weakening of the collaboration. Rather, it reflects the cyclical nature of a large multi-program discovery alliance. Looking ahead, it's important to recognize that the collaboration is already creating value in its current phase, with a focus on building scientific depth and portfolio quality. While this phase continues to require investment, the scientific value being created today is expected to translate into renewed revenue growth and improved margins. Importantly, this fluctuating profile is expected to evolve as programs progress through the clinic.

With the first joint asset having recently entered phase I, clinical stage programs are expected to progressively complement the base business from 2027 onward. This clinical progression will help smooth revenue fluctuations, add new growth drivers, and support the margin expansion underpinning our midterm framework, which Paul will discuss in more detail later in the presentation. Continuing on slide 10, I would like to address the second factor that significantly impacted our 2023 to 2025 revenue profile alongside our BMS collaboration, the evolution of our EVOequity strategy. Between 2016 and 2022, we invested approximately EUR 200 million to build up an investment portfolio of approximately 40 early-stage biotech companies. The objective was to gain early access to innovation while generating revenues through our role as an operational and scientific partner. At its peak, this portfolio generated close to EUR 100 million in annual revenues.

As these companies advanced into clinical development, their strategic relevance for Evotec naturally declined. This was accompanied by a reduction in our operational involvement and consequently lower revenue contribution. We've therefore moved decisively into the monetization phase of this strategy. Following the divestment of Recursion, generating proceeds of nearly $70 million at the end of 2024, and additional access throughout 2025, we have significantly reduced our equity exposure. As of year-end 2025, 29 investments remain with our strategic focus shifting from revenue contribution to value realization. These divestments represent pure upside for Evotec. Recent transactions include the sale of our stake in Dark Blue Therapeutics following its acquisition by Amgen in a deal valued at approximately $840 million, generating an initial cash consideration for Evotec of around $13 million.

In addition, the recently announced sale of Tubulis in a transaction valued at approximately $5 billion is expected to deliver cash proceeds of around $100 million to Evotec at closing. In both cases, the upfront amounts are complemented by meaningful contingent milestone payments of more than $150 million, providing additional future upside. EVOequity is transitioning from a cash-out to a cash realization model. As operating involvement declines by design, the associate wind will fade away in 2026 and beyond as we wind down the portfolio. On slide 11, let me briefly remind you of Horizon, our major operating model transformation and a core element of Evotec's value-creating strategy.

We introduced the Horizon transformation earlier this year to implement a new and focused operating model built across the three pillars of operational excellence, scientific leadership, and commercial execution with the goal of creating a more agile, more focused, and more competitive Evotec. Under the operational excellence pillar, we are streamlining our footprint from 14 to 10 sites in 2026 and 2027 with planned closures of sites in Abingdon, Munich, Lyon, and Framingham. This continues our shift from a dispersed multi-site structure to a focused network. The footprint optimization also anticipates a reduction of approximately 800 positions across affected locations and enabling functions, a necessary step to align capacity with demand and reinforce execution discipline. Under the scientific leadership pillar, Horizon will consolidate key capabilities into dedicated centers of excellence, each with clear mandates and end-to-end accountability, strengthening our ability to deliver integrated high-quality science.

Finally, under the commercial execution pillar, we're expanding our commercial organization and upgrading how we engage with customers under new leadership following the appointment of our new EVP and chief commercial officer, who will accelerate growth, drive a more integrated go-to-market model, and increase strategic partner engagement to improve our win rates across high-value mandates. We're now progressing at pace through the required legal and regulatory processes to deliver a structural run rate savings of approximately EUR 75 million by the end of 2027. These savings primarily reflect a structurally lower cost base resulting from targeted workforce reductions and reduced footprint-related overheads as we consolidate our global operations. We expect between 20%-30% of the total savings to materialize in 2026, with the remaining majority becoming visible in 2027. Horizon is a defined time-bound realignment with a clear end state. We plan to execute swiftly and only once.

Importantly, we do not expect material disruption to ongoing customer and partner programs. In the context of expanding our commercial organization under new leadership, on slide 12, we're very pleased to welcome Dr. Ashiq Khan as our new Chief Commercial Officer. Ashiq joined Evotec at the beginning of April, bringing more than 15 years of international leadership experience across biotech, CRO, and AI-driven discovery platform companies. He has closed multi-billion dollar agreements and led business expansion in markets around the world, including several years at Schrödinger, where he helped advance AI-enabled drug discovery partnerships and close major strategic pharma agreements. With a strong track record of driving growth and closing high-value deals worldwide, Ashiq will lead the build-out of a globally integrated fit-for-purpose commercial organization at Evotec.

Let me now show you on slide 13 how our leading commercial indicators are beginning to move in the right direction, as the new commercial organization we're putting in place is gaining traction. The selected indicators shown here are ordered along the commercial funnel, from early customer engagement through to net sales progression, and provide us with an early view of business momentum ahead of reported revenues. Over the course of 2025 and into early 2026, we've seen a strong decrease in negative change orders. At the same time, the number of proposals submitted to customers in our discovery segment has steadily increased, reaching levels around 50% higher than at the start of 2025. While this reflects improved commercial outreach and a more systemic engagement with customers, activity in preclinical development has not yet achieved the same momentum, reflecting a low number of fully integrated discovery to development customer engagements.

In parallel, the aggregated value of the proposals in the discovery segment has increased. Streamlining our sales and delivery processes has further led to improvements in execution metrics. Proposal turnaround times have been significantly shortened, and these improvements are translating into better order dynamics and reinforce our assessment that the new commercial organization is operating more effectively. These leading commercial indicators are now feeding through to sales performance. DMPD sales orders declined in 2024 and reached a trough mid of 2025. They recovered towards the end of the second half of 2025 and have since stabilized above early 2025 levels. Today, we're seeing our deal pipeline growing with increasing interest from potential partners. Looking forward, our differentiated technology platforms are expected to enable a higher number of strategic technology-driven deals starting in the second half of 2026.

While it is still early, we see initial indicators of recovery and the commercial transformation in DMPD being on track. Let me hand back to Paul to provide an overview of our path to sustainable growth in 2026 and beyond.

Thank you, Christian. On the next few slides, I'd like to take you through the building blocks of our 2026 outlook and how the measures we've discussed today translate into our medium-term framework. Let me begin with our full-year 2026 outlook on slide 14. As outlined in our Horizon communication on March 10th, we view 2026 as a transition year, with Horizon measures phasing in over the course of the year. For the full-year, we guide toward the group revenues of approximately EUR 700 million-EUR 780 million at incurred foreign exchange rates and EUR 730 million-EUR 810 million at constant exchange rates. Adjusted group EBITDA is expected to fall within the range of approximately EUR 0-EUR 40 million at incurred foreign exchange rates, and EUR 10 million-EUR 50 million at constant exchange rates. Turning to the phasing of the year.

The first half of 2026 will reflect transformation actions already initiated under Horizon. While we see an improvement in our commercial indicators, we still expect a weaker first half, driven by the continuation of early drug discovery market softness seen in 2025, and the non-recurrence of the $25 million Sandoz license that contributed to the first quarter of 2025. In the second half of the year, we expect a strengthening profile driven by an increasing number of strategic partnerships and a market recovery. Looking at the Just - Evotec Biologics is expected to maintain a strong underlying growth, recognizing the non-repeat of the EUR 65 million Sandoz license payment in the fourth quarter of 2025. Non-Sandoz and non-DoD activities are expected to grow by about 40% for the full-year of 2026.

This more than offsets the expected continued decline in the DoD related revenues following the announced budget cuts and foreign exchange headwinds. In DMPD, we expect soft standalone revenues in the first half of the year, with a recovery to low single-digit growth in the second half. In addition, we expect our strategic technology-driven partnerships to contribute more visibly in the second half, creating incremental commercial opportunities supported by our differentiated platforms. Taken together, these effects are expected to bring full-year DMPD revenues into the low to mid-single-digit growth range. For the full-year 2026, foreign exchange is expected to represent approximately 3.5% headwind to group revenues.

Beyond revenues, operational improvements resulting from the Horizon transformation are expected to become increasingly visible in the second half of 2026, with roughly 20%-30% of the EUR 75 million in structural run rate savings expected to materialize in the second half of 2026. In addition, removal of the cost drag from the sale of the Just Toulouse site will benefit our Just - Evotec Biologics business, contributing an estimated EUR 20 million year-on-year improvement in segment earnings. Having discussed our full-year 2026 guidance, let me now broaden the time horizon and on slide 15, briefly remind you of our new mid-range framework through to 2030, which we announced in March 2026. This framework reflects a phased trajectory from 2026 to 2030 and is designed to align the timing of Horizon transformation measures with the expected evolution of the revenue mix across our two business segments.

Within our multi-stage Horizon transformation journey, focusing on commercial excellence, operational simplification and technology leadership, we expect group revenues to grow to more than EUR 1 billion by 2030, with an adjusted EBITDA margin expected to reach 20% by 2028 and exceed that level by 2030. The midterm margin in progression is supported by a combination of external recovery and internal structural improvements. Externally, we expect the early stage discovery market to continue normalizing as industry innovations rebound. Internally, the trajectory is driven by the recurring structural savings from Horizon, a continued shift towards higher margin and more capital efficient revenue streams, and increasing operating leverage as growth and productivity resume. The key drivers and building blocks that underpin the anticipated midterm margin expansion are illustrated on slide 16. We see the DMPD segment growing at high single digits from 2026.

This reflects both a stabilization of early stage drug discovery market and the transition into the realization phase of our BMS collaboration, which will contribute approximately 50% of the expected DMPD earnings growth between 2026 and 2028 as jointly developed assets progress into and through the clinic. The Horizon cost reductions across our operating capacity, footprint and SG&A are expected to contribute nine percentage points of margin expansion. As previously noted, we expect to reach the full run rate effect of these savings by the end of 2027. In the Just business, the continued expansion of our customer base, together with new revenue streams from the proprietary platform components such as our cell line, our cell culture media, as well as license opportunities, support ongoing margin expansion.

These building blocks take us to the expected 20% Adjusted EBITDA margin by 2028. Further margin expansion is then projected to come from improved levels of automation and productivity, notably in our DMPD operations. Post 2028 margin expansion in the Just - Evotec business is additionally reflecting royalties from the commercialization of the 10 biosimilars under the recent Sandoz transaction. With this, let me hand the call back to Christian.

Before we sum up today's presentation, I would like to share an important governance update. Evotec Supervisory Board has proposed Dieter Weinand for election as new chairman at our next annual general meeting on June 11th, 2026. Dieter is a highly respected industry veteran with more than three decades of global pharmaceutical experience. He has held senior executive roles at companies including Bayer, Pfizer, Bristol Myers Squibb, and Sanofi, and most recently served as President and CEO and Chairman of Bayer Pharmaceuticals. He brings deep commercial expertise, a strong track record of driving performance and disciplined execution, as well as extensive board and governance experience. This makes him very well-positioned to support Evotec in its new phase, particularly as we sharpen our focus on cash and profitability.

At the same time, I would very much like to express our sincere gratitude to Professor Dr. Iris Löw-Friedrich for outstanding leadership and long-standing commitment as chairwoman of the Supervisory Board and for the important role she has played in shaping Evotec's strategic development. Before we turn to your questions on slide 18, let me briefly summarize the key takeaways from today's presentation. 2025 demonstrated that Evotec can deliver with discipline, closing the year at the high end of guidance through strong execution, cost control and CapEx discipline, even in a challenging environment. At the same time, Horizon provides a clear and actionable path towards sustainable, profitable growth through 2030, built on structural optimization and a more focused operating model. As part of this transformation, we have strengthened our commercial organization and will accelerate execution under new leadership.

While the DMPD environment has remained challenging, the headwinds are actively managed and expected to fade. With improving market conditions, we see the basis for recovery building into the second half of 2026. Taken together, we're actively transforming our business model toward higher quality, more capital efficient growth, with Just - Evotec Biologics playing an increasingly important role. These developments position Evotec to deliver profitable growth and sustainable value creation. With this, I would like to open the call for your questions. Thank you.

Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to only use handsets while asking a question. Anyone who has a question may press star one at this time. Our first question comes from Christian Ehmann, Berenberg. Please go ahead, sir.

Good morning, everyone. Thanks for taking my questions. I'll start with a few until I get back into the queue. First of all, I very much appreciate the 40% year-over-year growth figure for non-Sandoz, non-DoD business in the JAB segment. Could you give us a little bit more detail on the starting point in 2025? How much of your revenues in the segment were from non-Sandoz, non-DoD sources? The second one would be in regards to the future nature of the BMS. I think in the past it was mainly FTE rates and also revenues for work packages that had to be finished. Can we assume going forward that this will now shift to more of a royalty milestone-based remuneration plan?

The third question for this time would be, can you remind us about the current clinical plans BMS has for the other asset in phase I? I think it was called back in the day Evotec or EVT8683. Thank you very much.

All right. Shall we start with the first one, the Sandoz topic, Paul?

Good afternoon, Christian. Yes, you're correct, non-DoD, non-Sandoz revenue growing 40%. We would expect to see that by end of 2026 that the non-Sandoz, non-DoD revenue is about 50% of the overall just business at this point in time. That is a significant growth since 2024 when we were approximately 25%. I believe in 2025 we're approximately 30%, to give you a little bit of a frame.

I will hand over the third question to Cord, although Christian managed a bit the expectations. Typically, it should not be us talking about the intentions of the clinical assets of BMS, but maybe Cord can shed some light on that. On the second topic, the whole program was always constructed in a way that at some point in time, there will be an increasing amount of milestones and ultimately also royalty payments through this collaboration. Yes, by design, you're right. Cord, is there anything you can add on the clinical plans?

Not really, but maybe just to try and give a little color on this. We remain excited about the program. We cannot comment on exact plans from the BMS side to move this asset, EVT8683, forward. As you can imagine, entering phase II clinical trials on Alzheimer's, that's a very significant step. I think a more thorough phase I is usually warranted in this regard, and I think that's currently what's going on. We have every reason to believe that this will be moving forward.

Okay. Thank you very much. I'll be moving back into the queue.

Our next question comes from Charles Weston, RBC. Please go ahead.

Hello. Thank you for taking the questions. Mine are all a little bit more near-term focused, specifically on 2026. First of all, you've indicated for the second half that you're expecting a market recovery. I was just wondering if you could help give us some color in terms of your assumptions or your confidence around market recovery versus your own sort of self-help from your new commercial efforts. Secondly, I wonder if I could ask for a bit of guidance on BMS for 2026. You've indicated that 2026 will be a trough, and I think the number was EUR 139 million in 2025. How much of a headwind ballpark could we expect in 2026 from BMS? I guess the same question for Department of Defense. Just last one, please. For 2026 milestone payments, I think in March you got a $10 million payment from BMS.

In your Horizon presentation, it looked like up to EUR 150 million could theoretically be payable this year, and you've said that you're expecting two more assets to move into phase II this year. How much milestones should we be thinking about in total for 2026? Thank you.

All right, Charles, thanks for the questions. Near term 2026 is obviously two elements. One is our own doing, you're right. The other is the funding situation in biotech. Now, in our view, the funding situation has mildly improved. Also, when you look at the executed deals, this money will have to flow back into biotech, and it's very difficult to split the increase in proposal and deal activities into what's market and what's our doing. Charles would probably really appreciate. We've seen the activities going up steeply. We don't believe it's just our doing, we also believe that a part of that is the market. Yeah.

Yeah.

When it comes to the second question, 2026 trough and impact BMS.

Yeah. Charles, directionally on BMS, as you rightly say, we expect the trough to be in 2026. Relative to what you see in 2025, we would expect a high single-digit decline relative to 2025 solely for the BMS segment. I think your third question was assumptions around milestones related to BMS, and you're right. Couple of things here. Firstly, the $10 million that was noted in the recent press release will be recognized in the first quarter as income. As we think about future milestones, income-related milestones, we would expect somewhere around the same in the second half. The $100 million that you referred to I think also reflects the cash payment associated with deals rather than the income-related element associated with those deals, as that cash is, or the income is recognized over a period of time.

Okay. Sorry. Can I just clarify when you say high single-digit, do you mean as a percentage or as a euro number?

Sorry. Yeah.

Okay.

It's as a percentage.

Thank you very much.

Our next question comes from Swayampakula Ramakanth from H.C. Wainwright. Please go ahead.

Thank you. Thanks for taking my question, and good afternoon, gentlemen. Couple of quick questions. One is on the Horizon implementation. With an expectation of 800 positions being cut and consolidation to 10 sites, just trying to understand what could be the risk of customer disruption, especially from the talent loss. How are you managing some of the project continuity, especially with key partnerships like BMS? And the second question is, post the Toulouse site sale, can you help us quantify the expected development revenues, milestones, and the timing of the royalty fees from the 10 biosimilar molecules? And when could we expect the first biosimilar to reach the market?

Okay. All right. First topic, Horizon. You probably appreciate that this was top of our minds and one of our most important criteria when we made decisions not to disrupt the business and particularly ensure that the customer relationships amongst any partnerships will not be impacted. As I mentioned in my speech, we don't think that there is any material risk. We've been, around that time and since then, in constant dialogue with our customers. I can tell you at this point in time, there was also no negative feedback from the customer side. It's all well appreciated. By the way, one of the feedbacks that most people were actually telling us, "Look, the whole market has gone through similar exercises." We're not the only player on the market who is resetting. We handle it with a lot of care.

We spend a lot of time in preparing these moves. We know exactly what we're doing. We think this is a contained risk. Paul, on the Touluse side.

Yeah, I think the question was around timing of the royalty streams post the sale and post the transaction with Sandoz. To give a little bit more context and color on that one. We would see a ramp-up of both new products and licenses, and new products, I mean, so culture media, cell lines, and indeed licenses between now and 2028. By 2028, that's in the range of around 10% of the Just revenue, and growing. Then beyond 2028 is when royalties kick in, and these are linked to the LOE dates of the drugs coming off patent that have been disclosed in our nine-month update and I think on Sandoz's own update as well.

Thank you. Thank you both.

The next question comes from Brendan Smith, TD Cowen. Please go ahead.

Great. Thanks for taking the questions, guys. Maybe just a bit higher-level question from me, if I could. I appreciate all the color on kind of the near-term growth drivers for this year. We started to hear from some of your peers about pharma and biotech kind of deploying AI internally, actually driving some stronger order patterns for some tools companies as a lot of pharma and biotech are looking to validate their models and outsource new protein manufacturing and analysis. Just wanted to ask if you've started to see anything similar from your customers and partners and whether that might be an opportunity for the JV business in any capacity moving forward. Just trying to kind of understand what some of the pushes and pulls there could be. Thanks.

Yeah. Thanks, Brendan. AI and we recognize maybe we have not been so vocal about that in the past, but it's an integral part of our drug discovery platforms. Cord in the Q3 call also explained that, for example, our BMS collaboration has extensively utilized those AI platforms. Moreover, it's not just pharma and biotech, Brendan, it's also the AI companies who make use of the services of Evotec. We definitely see AI as an important tool for the future when you look at toxicology, DMPK, ADME-Tox prediction. There's probably a view for the next five, six, seven, eight, maybe 10 years. There's a coexistence, which could even drive volume up. We see that, we also hear that. We not only see this from biopharma, but we also see it from AI companies coming to us. I hope that helps.

All right. Thanks very much.

Our next question comes from Alexa Chan, Bank of America. Please go ahead.

Hey, thanks. It's Mike Raskin today. Want to follow up on a couple earlier comments you made in terms of DMPD in 2026. You talked about second half, low single-digit growth, and sort of what's supporting that in the market. I just want to clarify, are you seeing orders already? The orders you're seeing, is that already sufficient to justify that, or are you assuming further order improvement? The comments you had made about orders in the second half of 2025 being a little bit firmer, do you expect that to continue? Sort of if you could expand a little bit on what's underpinning that, if that's more biotech or pharma and sort of where that's coming from. Then, the separate question is going to be on the pacing of Horizon going forward.

Looking at what you presented in slide 11 in terms of that timeline, site closures, workforce reductions kicking off in 3Q, 4Q this year, whether there's any opportunity to move that up a little bit, or accelerate that. Just sort of what are some of the constraints on that? You alluded to limitations of local law, things like that. Is that more tied to that, or just that the decisions haven't been made yet? Thanks.

Thank you for the question. Maybe I'll start with the second one. When you think about the usual processes around site closures in Europe, there's obviously legal and regulatory requirements. We expect the workers' council negotiations, which have actually started in the first quarter, to continue through Q2 and Q3, with the site closures then basically starting in the fourth quarter, workforce reductions starting in the third quarter. All of that subject to agreements with local workers' councils. Yes, there is a phasing and wherever we can be faster, we are, and we will be. One of the sites obviously is in the U.S. where there are different requirements, and that's also why it is on a different time horizon. You're right, the limiting factor here is the consultation process. All the other work, the preparation work, has been done. We're not awaiting anything else.

With regard to the DMPD business, second half, low-single-digit, when you think about that, components of that, there's obviously the standalone business, the integrated business, and strategic deals. We haven't seen a lot of traction on larger integrated deals, but we expect given that our funnel on strategic deals has significantly improved in the last couple of months, that there will be an uptake also, or a stronger contribution from new strategic deals. The prospects that increased in 2025 have led to a better sales order trajectory compared to mid of last year. I think it's fair to say that it's going to be a mix between this plus the strategic deals that we see coming. Paul, anything you would like to add?

No, I think Christian has articulated it well, and again, I'll just refer to the slide where we see those strategic DMPD partnerships coming in in the second half and cautious on this low-single-digit growth in the second half. We'd see first half remaining challenging for the standalone business.

Great. Thanks.

As a reminder, if you wish to register for a question, please press star and one on your telephone. Our next question is a follow-up question from Charles Weston, RBC.

Thanks for taking the follow-up. The Tubulis up front is obviously very considerable for Evotec. I just wondered if you could comment whether you see other meaningful stakes in your portfolio of companies with clinical stage assets, which we should keep an eye on that could lead to some upside in the future in particular.

Charles, we've got about 29-30 companies left as of December 2025. We definitely believe that there are a couple of really interesting assets. As always, when you have a portfolio, some are more progressed, some are less advanced, but we clearly see some of them on a very good path. Now, as you can imagine, those are deal events. Either you have a buyer, you don't have a buyer, like what happened this week. It was fantastic. We do expect that there will be further opportunities in the future. As I said, for us, this is upside. For us, this is a cash-generating upside going forward. Yes, our portfolio remains interesting. Yes, we believe that there is upside going forward. Quantifying it and timing it, don't ask me, please.

Okay. Thank you very much.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Sara Faki for closing remarks.

Thank you. With this, we would like to conclude today's conference call. Thank you for your participation, and please feel free to reach out to the investor relations team should you have any further questions. Thank you and goodbye.

Ladies and gentlemen, welcome to the Evotec SE Quarterly Statement 9M 2025 Conference Call. I'm Lorenzo, the Chorus Call operator. [Operator Instructions] At this time, it's my pleasure to hand over to Volker Braun, Head of IR and ESG.

Thank you, Lorenzo, and good morning, good afternoon to all of you in this call. We have a lot to cover today, and I'll keep my part very short. So let's move on to cover the housekeeping items on Page 2. We share the cautionary language here as usual, and some statements will be future-looking based on information available today and they might be subject to change in future. But now let me hand over to our CEO, Dr. Christian Wojczewski. Christian, please.

Thank you, Volker. Good morning and good afternoon to everyone. It's a pleasure to welcome you all to this call. I'm looking forward to taking you through the progress we've made over the past 6 months of transition since the announcement of our new strategy. Very pleased with the momentum and high speed of our transformation towards better monetizing our technology leadership. The steps we've taken in the past couple of quarters are a strong fundament for our value creation path and for the execution of our mid-term outlook. I'm confident that this will become more visible to you while we lead you through this presentation. Let us now take a closer look at the year-to-date performance. In the first 9 months, Group revenues landed at EUR 535.1 million, which is a 7% decline versus the previous year. This is driven by our D&PD business, where we faced continued softness in the early drug discovery market, leading to 12% revenue decline. In contrast, our Biologics business, JEB, remains on a strong growth path with plus 11% growth in the first 9 months. As mentioned in the last call, we expect the trend in D&PD to continue in the second half of 2025, while for Just-Evotec Biologics, we anticipate revenue growth to further accelerate. Taking a closer look into the D&PD business, we see several main elements driving past and future performance. Talking about the early drug discovery market environment, the VC funding for biotech is certainly not yet favorable, affecting the business development activities of the transactional service business. However, over the last 2 quarters, the number and value of proposals going out from Evotec to customers is clearly trending upward, indicating that the business is stabilizing. Also, the level of negative change order volumes in Q3 has substantially improved versus first 2 quarters. In the meanwhile, we have taken appropriate actions to adjust our cost base. We've introduced a new organization structure, and we're strengthening our commercial and operational capabilities. 12 months ago, we were targeting EUR 30 million of cost out in 2025. We raised the bar over the course of the year. And during the last call, we committed to EUR 60 million of cost out, and we will stay ahead of plan. As announced last call, we are working on delivering additional EUR 50 million of cost out and productivity measures in the future. You should expect a full update on the initiatives we're working on during our next call. The business momentum with strategic partnerships remains healthy, ensuring continued mid-term revenue streams. Those strategic partnerships are expected to also result in meaningful progression of our asset portfolio over the next 6 to 9 months. Several catalysts lie ahead of us, leading to the transition of molecules from the early drug discovery stage into preclinical and from preclinical into clinic. And I'm pleased to announce today that we're expecting up to 4 molecules from our partnered asset pipeline to be in Phase II clinical studies in 2026. This is exciting news for Evotec as it demonstrates the scientific strength and the outstanding capability of our technology. And it underpins our plan to generate meaningful upside to milestone and royalty payments in the future. More about this a bit later. At Just-Evotec Biologics, we're making great progress in our efforts to diversify and broaden our customer portfolio. Business development within non-Sandoz and non-DoD business is moving fast. The momentum for this part of the business has further accelerated versus half year results to now over 100% growth after 9 months. Moreover, we signed a transformational deal between Just-Evotec Biologics and Sandoz just hours ago. This landmark transaction is a strong testament to our cutting-edge technology and capabilities in the fast-growing biologics business. It will unlock payments of more than $650 million over the next years. In addition, we expect to generate sizable revenues from royalty streams related to 10 biosimilars. We're extremely excited and proud to have been selected as partner by Sandoz on their path to shaping the biosimilars market. In a nutshell, we are well on track with our strategy, driving both scientific and operational excellence. Since the VC funding for biotech customers is relevant for approximately 30% to 40% of our revenue base in D&PD, let me share some further background information about the market trend. Updated data on total venture capital funding environment shows no material change compared to the analysis we shared in August. The absolute funding level has not grown over the past 2 quarters. The share related to discovery and preclinical stage companies remains well below pre-pandemic levels, suggesting a continuing short-term investment focus on companies with clinical stage assets. We spoke about the temporary deprioritization of early discovery and development activities and funding. It needs to be overcome before we see forceful recovery of the early drug discovery market. That said, we do see some encouraging developments. Negative change orders are normalizing and customer activities are increasing. In the first half of 2025, the balance between positive and negative change orders was impacted by higher than expected cancellation volume, contributing to a weaker sales performance in D&PD. This effect was related to a small number of contracts, which were canceled by customers either for strategic or scientific reasons. In Q3, we're back to normal levels. The development of our change order balance is shown in the upper graph. In contrast to the comparably low funding activities for early-stage biotech, the business activity level at Evotec has picked up. The number of proposals issued to our customers has grown 20% over the past 2 quarters, and this is also in line with the growth in total value of proposals. Even though those early indicators are promising, we are not yet indicating a change of trend. We remain vigilant in monitoring market developments and continue to adopt to our customers' evolving needs in a more agile way. In parallel, we are building a more targeted go-to-market approach. And as mentioned last time, we are strengthening our commercial organization. I'd like to now hand over to Paul, who will guide you through our financial results.

Thank you, Christian, and a warm welcome from my side. Let me guide you through our year-to-date results in a little more detail. Our first 9 months Group revenues reached EUR 535 million, a 7% decline versus the same period in 2024 and is aligned with our expectations. Firstly, our D&PD revenues declined by 12% to EUR 391.9 million in a persisting soft market in early drug discovery, as Christian commented on in his introduction. Also, as mentioned last time, included in this result is the expected temporary decline in the BMS revenues. Our Just-Evotec Biologics business continues to grow strongly in the first 9 months of the year and is on track for a very strong 2025. For the first 9 months of 2025, revenues reached EUR 143.2 million, which is up 11% versus the first half of 2024. As we mentioned last time, we continue to see a broadening of our customer base with non-Sandoz and non-DoD customers growing 105% in the first 9 months versus last year. During the first 9 months of 2025, our Sandoz business grew low-single-digits. Although as we look forward, we expect meaningful full year growth following the completion of the recently announced transaction, which will include multiyear consideration for technology access, development revenues and product royalties. Our R&D spending remains on the trajectory shared last time and is reduced by 33% versus prior year period from EUR 41.1 million in the first 9 months of 2024 to EUR 27.7 million in the first 9 months of 2025 as we direct our investments to those most relevant for our partners. Adjusted Group EBITDA reached negative EUR 16.9 million, driven by the weaker than expected D&PD revenues and our fixed cost base. We are well on track with our cost-out initiatives to deliver the EUR 60 million of in-year structural cost reduction in 2025 that we communicated in our last call. We also remain focused on delivering the additional mid-term cost and productivity actions that we discussed in our April update. Our Just-Evotec Biologics business remains ahead of expectations, helped by positive operating leverage despite the planned J.POD build-out. Bridging to our full year outlook, we expect our fourth quarter profile to reflect the higher revenue contribution weighting that we have seen in prior years. In addition, our recent guidance update in July reflected lower full year D&PD revenues with an overall improved business mix, including the effects of the events announced last night. Now continuing with cash flow. Our year-to-date free cash flow has improved by 14% versus the same period last year. This is despite our third quarter operating cash flow having a tough comparable to last year when we received $125 million of BMS payments, whilst the recently announced BMS neuro payments has only been received in the fourth quarter of this year. However, in line with our expectations, our investing cash flow continued to see sequential improvements as we drive more rigor in our CapEx investment processes whilst also completing the J.POD build-out. Our net debt levels grew versus the second quarter of 2025, which also reflected the higher lease obligations following the adoption of a long-term lease agreement in our Hamburg facility. Following the completion of our transaction with Sandoz planned in the fourth quarter of this year, we expect our liquidity to be in a significantly stronger position with the residual long-term debt portfolio. With that, I hand over to Cord.

Thank you, Paul, and good morning and good afternoon to everybody on the call also from my side. As you know, at Evotec, we strive for technology and science leadership on our mission to pioneer drug discovery and development. Our ambition is to accelerate the journey from concept to cure in partnership with our customers. Today, we are pleased to talk about considerable achievements we have made along this strategy in both segments. Let me start with a look at the D&PD segment first. We are seeing great scientific progress with our strategic partnerships. Based on these achievements, we continue to feed and expand our strategic partnerships and are confident that our common asset pipeline will show substantial progress not only in 2025, but also during the next 6 to 9 months. So what is our approach? Christian already mentioned that we offer end-to-end discovery services, including development and also highly innovative drug discovery technology platforms. We strive to combine both offerings to create superior customer value. Our core service offering spans the entire value chain from target identification to IND. When we combine those individual services, we can seamlessly run integrated research projects using highly automated workflows. This train of services, shown in blue on this chart, is the backbone of our operations. Within our strategic partnerships, we are then adding proprietary AI-enabled technology platforms on top of this. These are shown here in pink. These platforms elevate our drug discovery platforms to the next level. Our AI-driven platforms are targeting, in particular, 4 goals. We create a much deeper understanding of disease biology, and therefore, patient stratification through our proprietary molecular patient database. We improve our target ID and validation efforts as well as hit identification through superior in vitro disease models driven by our iPSC platform. We enhance and accelerate hit to lead and lead up processes through in silico profiling and an eye supported molecular design. We reduce the risk of failures due to industry-leading tox and safety predictive tools. So this means that AI for us is not a stand-alone feature. We have embedded AI deeply into our toolbox, enhancing the performance of each and every platform in the value chain. Based on this, we not only shorten time lines, but we also improve outcomes. Let me briefly take you through the individual elements. Our proprietary molecular patient database consists not only of highest quality and comprehensive clinical data, but also of deep multi-omics data based on corresponding patient samples. This database is invaluable when it comes to target ID and validation and is supported by AI machine learning algorithms. Our E.INVENT platform is a highly comprehensive suite of AI machine learning supported molecular design tools, predicting everything from solubility, ADME-tox parameters, affinities to targets, but most importantly, it supports our -- it accelerates our molecular design cycles. Our AE safety platform is a suite of NAMs consisting of gold standard in vitro models, which are combining with high content omics and/or high content imaging data to predict the safety and tox profiles of drug candidates. We are doing this with extremely high accuracies, and I will come to this in more detail later. Furthermore, we have an extremely versatile iPSC drug screening platform, which in combination with omics and high-content imaging data is able to profile disease relevance as well as efficacy and safety of drug candidates throughout the drug discovery process with higher granularity, and therefore, higher accuracy than standard in vitro models. All of these platforms are underpinned by our seamless high-performance omics platforms, which can generate, in particular, transcriptome, proteome and metabolome data at highest quality and with unmatched throughput. I will come to the details here later as well. Finally, we are able to bring all of these data together in our data analysis tool called PanHunter. This tool facilitates the handling and the analysis of high-dimensional data sets and is in many areas, AI machine learning supported. On the next page, I will show you selected examples of significant scientific achievements in 2025 and also talk about how they translate into commercial results with our strategic partners. And thereafter, I will show you how those partnerships are associated with highly attractive long-term financial upside. But let me take you through a few selected highlights. I have mentioned the importance of our Evotec molecular patient database as a foundation for a better understanding of disease processes, and therefore, also target ID and validation. And in 2025, we have significantly expanded the database through the addition of new cohorts, in particular, in kidney diseases, obesity, but also immunological diseases. This database continues to support strategic partnerships, while also generating multimillion dollar success-based payments. As far as our iPSC drug discovery platform is concerned, we continue to upgrade our disease models into more complex organoid-type in vitro models. We have done this particularly successful in the kidney disease space. We continue to also make progress in our AI-supported small molecule design platform, E.INVENT. Here, we continue to build models that support specifically the design of certain compound classes as we believe that there are no one-size-fits-all models that are suitable for every compound class. We mentioned previously that we continue to invest in new approach methodologies, NAMs, to predict safety and toxicology of drug candidates. Also, here, we continue to make very significant progress by continuously improving our existing models, while also adding further models. For example, our drug-induced liver injury tox prediction tool continues to improve as now we have reached a predictive accuracy of more than 90%. Similarly, we have developed a highly predictive cardiotox prediction tool, which also has a predictive accuracy of about 90% A further example is a new model of a -- in a teratogenicity prediction tool, where we are currently approaching 80% of predictive accuracy. To our knowledge, these omics and image-based AI-supported safety tox prediction tools are absolutely industry-leading when it comes to their predictive accuracies. Finally, I would like to briefly talk about scientific progress in our PanOmics platform. Our high-performance PanOmics platform continues to evolve. In 2025, we reached 2 landmark achievements. With our high-throughput transcriptomics platform called ScreenSeq, we conducted a high-throughput compound screen, screening over 250,000 compounds using transcriptomics as the primary read-out. To our knowledge, this is an industry first and has never been done before. Similarly, we keep improving our proteomics platform. We have improved efficiency, automation and throughput of our platform significantly and expect to profile over 100,000 compounds in 2026 using proteomics as the primary read-out. To our knowledge, there is no other company generating as many proteomic compound profiles in the industry or processing as many samples using proteomics. So it is great to see that we continue to make this much progress on our AI-supported proprietary platform. Just as important is, however, that these platforms continue to support the business financially. The combined order value to these -- directly tied to these AI-powered platforms is currently north of $200 million already. Beyond this, it is important to keep in mind that these platforms are not only supporting the business through research payments, they enable us to build strategic partnerships, which fuel our partnered asset pipeline with very substantial financial upside. And this is shown in more detail on the next slide. Today, Evotec has a pipeline of more than 100 projects. Over 60% of these projects are part of strategic partnership, and therefore, fully supported by these. All of the more advanced assets, in particular, those in clinical and preclinical stages are supported by partnerships, and therefore, represent pure financial upside for Evotec. Collectively, this portfolio represents a non-risk-adjusted value of over EUR 16 billion just in milestones. In 2025, the pipeline progressed significantly, which means that the total milestone potential of more than EUR 16 billion as well as significant royalties is becoming increasingly tangible. Accumulated returns up to 2028 could total on the order of EUR 500 million. In April, we gave you a status update on our asset portfolio. At that time, in total, we had 12 projects of our 100 projects were beyond the discovery stages, 6 of these were in preclinical stages and 6 in clinical Phase I. In 2025, 2 assets have progressed from Phase I to Phase II of clinical development. Furthermore, we expect that 1 asset will move from the preclinic into the clinic. And moreover, we anticipate further progress over the course of the next 6 to 9 months with 2 further molecules expected to move to clinical Phase II. This means that there's a high likelihood that our asset pipeline will have in total 4 molecules in clinical Phase II, each of them with a different partner in different indication areas. Overall, we are clearly pleased with a lot of progress on multiple fronts. First of all, we have very significant scientific progress on AI-supported platforms. We have been able to show very significant progress in our clinical and preclinical portfolio of assets with 2 new assets in Phase II and additional assets expected to come to the clinic soon. And finally, our discovery stage pipeline also continues to expand and is expected to continue to fuel our preclinical stage portfolio going forward. So a lot more exciting news to come here within the next 6 to 9 months. This is where I hand over and back to Christian.

Thank you, Cord. Let us now switch gears from monetizing technology leadership in D&PD over to doing the same for Just-Evotec Biologics. As you will have noted, last night, we announced a successful signing of the sale of the Just-Evotec Biologics' Toulouse site to Sandoz. Under this transaction, Sandoz will acquire Just-Evotec Biologics EU plus a technology license to our continuous manufacturing platform. The agreement includes additional license fees and development revenues. This marks a pivotal milestone in the journey of Just-Evotec Biologics and underscores the successful execution of our strategy. We aim to close the transaction together in 2025, subject to meeting customary closing conditions, including foreign direct investment clearance by the French authorities. With the transaction, we are reconfiguring our successful partnership with Sandoz which started back in 2023 with the intent to support the expansion of Sandoz biosimilars pipeline and was extended in July last year. We are now converting a collaboration that was based on a long-term manufacturing arrangement into a new partnership centered around technology transfer and enabling our partners. The rationale for the deal is clear and compelling and it follows the strategy we outlined for the whole company. Number one, we will focus on our core competencies. This is making business by leveraging our technology leadership. Our intent is not to run a fleet of manufacturing sites as a classic CDMO player. Number two, we're entering a new episode of growth. Our commercial approach will pivot towards an asset-lighter, higher-margin business model, one that leverages best our technology, scales to partnerships, avoids the need for large upfront capacity investments and delivers superior returns. Number three, we remain fully equipped to serve all our customers through our center of excellence in Redmond and Seattle. Operationally, we have no limitations to support the growth plans of our partners. Number four, this deal is financially highly attractive for Evotec as it provides us with short, medium and long-term economic benefits. On this page, you see a summary of the financial parameters of the deal. We've agreed on an initial consideration of about $350 million for the site transfer and upfront technology license payments, which will be effective short-term. Over the mid-term, Evotec has the potential to generate revenues from licenses and development services plus milestones of over $300 million. Those payments are related to enabling our partner to manufacture biosimilars. In the time period thereafter and starting with commercial success, Evotec is eligible to royalty payments for up to 10 molecules. These 3 phases, starting with a handover, create sustained cash flows over an extended period. At the same time, we improve our revenue mix, reduce CapEx intensity and unlock high-margin IP and technology streams. As part of the deal, up to 10 molecules developed with the Evotec continuous manufacturing technology are eligible for royalties. As recently published by Sandoz, the Evotec partnered molecules in development are targeting a fairly large share of the originator biologics market. For example, the 6 most advanced molecules address a combined net sales of approximately $92 billion. Another 4 molecules are currently not disclosed. Looking ahead to the future of Just-Evotec Biologics beyond our great collaboration with Sandoz. Our U.S. operations will remain a center of excellence for biologics discovery, process development and manufacturing. The hub of innovation fully aligned with our mission to discover, develop and deliver the next generation of medicines faster, smarter and more sustainably. Given the strong momentum of our U.S. business with over 50 ongoing customer projects, we've expanded P&PD in Redmond and are contemplating further expansion in manufacturing selectively. Going forward, we will provide additional commercial routes for our customers to use our proprietary technology. With the transaction announced last night, we've validated the value of the technology, and we've demonstrated the IP licensing model for our continuous manufacturing platform is a very attractive path for our partners. We're now adding further optionality, including licensing of our cell lines, perfusion media and the launch pad concept to enable alternative manufacturing platforms via our J.POD design. In very simple terms, our job is to drive the innovation forward and to enable our partners to successfully launch and manufacture biologics products. Just-Evotec Biologics has 4 main compelling modules to offer on this page in blue, J.HAL for molecule discovery; J.MD, our machine learning-enabled molecular development technology; JP3 for complex biologics process development; and the J.POD for continuous manufacturing. Until now, we have deployed this technology as part of an overall plan to manufacture biologics. This would have required Evotec to continue to invest in the expansion of our manufacturing footprint. The transformation towards the next-generation CDMO model allows us to now deploy the technology without having to make those investments. All components are already in place, such as J.CHO, J.MEDIA, J.TRAIN and J.POD, here in pink. The performance of our proprietary cells and cell culture media customized for the perfusion-based continuous manufacturing process is industry-leading. Today, we are only using them for in-house development. For tomorrow, we see the potential to leverage these assets along a product commercialization path. On the path to enable our customers, there are multiple options to ramp up manufacturing capacity using our technology without us directly investing, such as integrating a J.TRAIN into a customer's facility or providing turnkey solutions at the customers' premises. Over to guidance and outlook. Our mid-term outlook shared in April is based on the ambition to better leverage technology and science leadership, the foundation of our strategy. It is therefore encouraging to see that the endorsement of an important customer of Just-Evotec Biologics, such as Sandoz, translates into tangible results only a few months later. Furthermore, our asset portfolio in D&PD has substantially progressed. The visibility towards our mid-term goals has improved substantially. You heard the detailed financial analysis from Paul earlier. Hence, I keep it short here on this page. Despite the headwinds in the early drug discovery market, we have full confidence and confirm our guidance for 2025 with a targeted revenue of EUR 760 million to EUR 800 million and an expected adjusted EBITDA in the range of EUR 30 million to EUR 50 million. We also see Evotec on track to reach its mid-term outlook at 8% to 12% top line growth and EBITDA margins greater than 20%. With the actions in place, we gained visibility and increased confidence in delivering our EBITDA margin. Let me conclude by making reference to what we discussed on 17th of April this year with you. Only half a year later, we see 3 out of 4 levers of our mid-term value creation unfolding their impacts. While it is too early to call the challenges in the D&PD market mastered, we see green shoots and continue to prepare our organization to be more competitive in this environment. Our cost-out program is ahead of plan. We fast track the execution of our new strategy at Just-Evotec Biologics and the asset pipeline is progressing well. For now, I would like to say thank you. We're now happy to answer your questions. Back to Lorenzo.

The first question comes from the line of Charles Weston from RBC.

They're kind of sequential in nature. So I'll just ask them one at a time, please. Firstly, just factually, how much were Sandoz revenues in the first 9 months? And what would the division have looked like without the Sandoz revenues and the associated costs in Toulouse?

Are you going to -- okay, so you want me to answer right away, right?

Yes, please. If that's okay.

I will hand this over to Paul.

Yes, Charles. So I would answer your question as non-Sandoz revenue year-to-date was north of 50% of the overall year-to-date. Also, your question was around, I think, earnings contribution within that. So the way to think about that is within the just profile that you see on a year-to-date basis, that includes the Toulouse build-out cost of around EUR 20 million. So it gives you a little bit of a view of what our kind of normalized view of share and profitability looks like for the division.

Okay. And then associated with that, therefore, how much of the EUR 30 million to EUR 50 million EBITDA guide for this year is the expected upfront recognition from the Sandoz deal?

Yes. When I -- just to give a little bit more color on the full year bridge. So first of all on the D&PD segment, just to reiterate what we said last time, we see similar trajectory on full year revenues for D&PD. We do see some potential mix improvements from milestones as we get into the fourth quarter. On the Just-Evotec Biologics side of the business, again, a couple of things. Continued outperformance and operating leverage as we go into the end of the year. Some impact of lower cost base in Toulouse, depending upon the completion timing once approvals are met. And we believe there's a license recognition element from Sandoz.

Sorry, I missed that last bit that you said around just after operating leverage.

So lower cost base in Toulouse, depending upon completion timing. And then yes, there is a license recognition from Sandoz, the split of which is included -- or the value of which is included within the initial consideration that is shown on the presentation, Charles. And at this stage, we're not actually splitting out the license component within that initial $350 million of upfront payment.

Okay. That just leads me on to the last one, please, for now, which is around the trajectory from 2025 to 2028. You've given us those revenue -- that revenue CAGR range. The margin guidance sort of implies EUR 140 million to EUR 180 million EBITDA in 2028 of a number that excluding the Sandoz deal is there or thereabout 0 this year. So can you just help us understand what the trajectory is of that in terms of what we might expect as the sort of year-on-year progression over the next few years? And how lumpy it might be depending on those milestones that you've talked about?

Yes. Charles, let me go. So on the mid-term outlook, you said we announced 10% to 12% revenue CAGR growing with EBITDA margin to 20% by 2028. Following the transaction and also the events that occurred so far this year in the D&PD business, I would say the revenue CAGR is on the lower end of that revenue range. However, we do see stronger potential on the EBITDA margin rate versus our initial assumptions. As it pertains to milestones, obviously, as you know, those are quite lumpy in both sides of the business, whether it's on D&PD or the Just-Evotec Biologics business. When you think about the transaction with Sandoz that we disclosed, where there are -- there is consideration between 2026 and 2028, what you should think about is around 2/3 of that is product development type activity and about 1/3 is licenses and milestones, which are subject to certain criteria. So it gives you a little bit of flavor of what that may look like over that period of time over the next 3 years.

The next question comes from the line of Brendan Smith from TD.

Actually, I really appreciate all the color on the AI capabilities internally. So I actually wanted to ask just a bit more about this. And really, I guess, to what extent the NAMs capabilities actually come up in your conversations with partners and customers thus far this year? If you've seen any material shift in that kind of tone? I mean, we get a lot of questions about whether pharma is kind of increasing investments in AI internally on their side is impacting their engagement with external partners offering those kinds of capabilities. So just wondering if you're seeing any demonstrable shift in where they're engaging on that side of things or if NAMs offerings are actually increasing that? I mean, how you might expect that to kind of help grow revenues over the next, let's say, 12 to 18 months?

Thanks, Brendan. I'll hand this over to Cord, and I'm really pleased to see also these questions. We recognize that we've maybe talked a little bit less in the past about those topics. But rest assured, there's quite some activity at the Evotec side. Cord, please.

So the NAMs are definitely getting more attention and also from the pharma side, particularly. Nevertheless, it's still sort of a muted growth in the area at this point in time. But we do see real signs of acceleration because people -- a lot of projects are integrating these NAMs at an earlier stage. You can imagine if you sort of have a predictive tool for drug-induced liver injury, if you introduce this late in the process, you essentially have to profile a handful of compounds maybe. But if you introduce it early in the process, you are continuously profiling potentially hundreds of compounds. And here, this is why we keep talking about industrialization of these platforms and making them high throughput feasible because this sort of opens up the funnel to really bring this into the -- on the critical path of the drug discovery value chain and incorporating these kind of assays at an earlier stage. So basically, right after hit finding, essentially, you can start incorporating this. So I think with this sort of seeing that people are getting more and more interested in incorporating these NAMs early, I would expect to see the revenues vastly accelerate on this front. If it's within the next 6 months, I would say that would be very ambitious. But within the next 12 to 24 months, certainly.

[Operator Instructions] The next question comes from the line of Fynn Scherzler from Deutsche Bank.

So the first one, I would like to ask them one by one, it's on your drug discovery and preclinical development segment and whether you are able to give any sort of glimpse on what you expect into 2026. Some of your U.S. peers sort of gave an early indication. I think consensus sits at around 5% growth for next year. Do you consider this a sensible starting point for the year or as of now would you point us to take a more cautious stance? I understood you spoke of green shoots and so on, but not really of an inflection yet. This would be very helpful.

Thanks, Fynn, for the question. Obviously, our visibility at this point in time is not all the way through 2026. And keep in mind, collectively, the industry since quite a bit was actually looking at when exactly the tipping point is happening. So I'm a bit cautious with making statements about when exactly the market is coming back. And as I said earlier, when you look at the individual bits and pieces here, you've seen on one slide, the change order pattern that wasn't favorable in the first and second quarter, the negative change orders, but it was also related to a few individual wins. Q3 looks much better than you've seen the number of prospects going out, right, plus 20%. You can draw conclusions out of that, but I'm not doing it at this point in time because these prospects need to convert into sales orders. So at this point in time, given that we have probably visibility into the next couple of months, I would not make a statement around plus 5% for the market next year.

Okay. That's helpful. If I can maybe follow-up with 2 shorter ones. So on the profitability in the Discovery & Preclinical Development segment, I think it was surprisingly weak this quarter, but the revenues were sequentially actually about stable. So could you maybe help explain that?

Say that again, please? I'm not sure I...

No, sorry, I was just saying that I think the revenue in the Discovery segment was pretty much flat sequentially, but the profitability was much worse than probably expected. What was the explanation for that?

Yes. Fynn, this is Paul again. When you look at the year-to-date profile of the D&PD business and then compare it to third quarter, you're correct that it appears to take a step down. We did actually in the first half have better mix and then also a license benefit in the first half that impacted positively. It didn't repeat in the third quarter. As I said in my comments, however, we do see further opportunities around milestones for the fourth quarter for D&PD. And that volatility, if you like, on milestone recognition will continue in this segment. But that explains the delta there.

Okay, helpful. And then one last one on the Sandoz deal. I'm not sure if you sort of compare the revenues that investors and the sell-side had expected from sort of your CDMO income stream that is now falling away. How does this compare to what you will get now in terms of licensing revenue and so on and so forth? So sort of the EUR 300 million package you described. What I'm trying to understand is consensus sits at around EUR 420 million for JEB business in 2028. Does that then look completely off from your point of view or is this still sort of the right ballpark or are people totally misunderstanding this at the moment?

I think a couple of points here. First of all, I tried to explain that there is the Sandoz deal, and that's a fantastic opportunity to partner with Sandoz, and it will continue to generate revenues and profit for the company. Then there is another 50 customer projects that we are serving out of the U.S. Don't forget to keep that in consideration. And then what we said is we're basically pivoting to a different model, right? So the way that we look at it is a much more capital-effective way of doing business. So moving from a manufacturing view to a license model allows us to generate revenues in our view, at a higher margin rate and much more capital efficient. And that's the driver why we've concluded that this is a great deal for the company. And as we said also last time from an NPV perspective, for us, this is a positive contribution.

Yes, Fynn. So there is some level of reduction on revenues. But as Christian rightly says, significant improvement in the gross margin driven by that higher quality revenue mix, whether that's tech licenses, royalties, consumable sales that we've talked about as well and that lower capital intensity. So we're trading to higher quality mix of business.

The next question comes from the line of Michael Ryskin from Bank of America.

This is Aaron on for Mike. You called out the soft early drug development market environment and VC biotech funding. Given the current market environment, can you talk a little bit about what you're hearing from customers? And related to that, a little bit more about the implications for the overall pricing environment?

So I think there's still uncertainty in the market, especially in biotech, and I've also mentioned that our D&PD business, 30% to 40% of the revenue is related to biotech. So there's quite some exposure here. That's number one. Number two, as we also mentioned throughout the course of the year, while conversations continue, there's more slicing happening than what we've seen in the past. So more cautious spending, less larger projects, more smaller projects and decision-making is slower. So that's a little bit the environment that I have -- the picture I've painted already in Q1 and in Q2. And we see this continuing with maybe the difference that, as I said, the number of prospects have come up quite a bit over the course of the last month and quarters, which shows that there is more activity and hopefully also more prospects for 2026. Pricing, obviously, is a function of also capacity in the market. It's clear that there has been overcapacity across the market in drug discovery, but it's also clear that most players are right now adjusting like we're doing it. So I see this actually also starting to normalize when demand and capacity is coming more into balance again.

Great. And then just a quick follow-up. I wanted to actually ask about the prospects. I'm wondering if you're seeing the prospects of green shoots within similar geographic regions, if there's any geography that's performing better than expected or worse than expected, if you could provide a little bit of color there?

That is actually the case, but it depends a little bit on the subsegment. And as you know, we're less penetrating the Asian market. So we've seen a little bit less dynamic in the U.S. market earlier this year and that has flipped more to the European market. So not very consistent and conclusive at this point in time, but there is variation.

The next question comes from the line of Charles Weston from RBC. Ladies and gentlemen, we lost the line with the questioner. So there are no more questions at this time. I would now like to turn the conference back over to Volker Braun for any closing remarks.

Thank you, Lorenzo, and thanks to all on the call for the engaged discussion. In case you feel not all of your questions were addressed, please feel free to reach out to me any time. We're looking forward to meeting many of you at the upcoming investor conferences in November and December. And with that, we wish you a good rest of the day. Thank you, and goodbye.