Good day, ladies and gentlemen. And welcome to the Evotec SE Half Year Report 2022 Conference Call. For information, today’s conference is being recorded. And at this time, I’d like to turn the call over to your host today, Dr. Werner Lanthaler. Please go ahead, sir. Dr. Werner Lanthaler: Thank you very much and good morning and a great day to everyone. Accelerating precision medicine, that’s the theme of today’s analyst presentation for our first half of 2022. Welcome to this. We have uploaded a presentation and will guide you through this presentation throughout the next couple of minutes. If you go to page number two, you can see that I am here together with my team. I am here with our CFO, Enno Spillner; our CSO, Cord Dohrmann; our COO, Craig Johnstone; and we are very happy to give you a brief update about our recent quarters and also an outlook for the remainder of 2022 and into the longer aspirations of Evotec. Our recently joined new colleague, Matthias Evers, is also on the call and we are very happy that he joined us recently. If you go to page number four of your presentation, you can see that significant new partnerships based on data driven platforms are accelerating our company. We see strong overall performance and progress in all lanes of the so-called R&D Autobahn to Cures. Actually, I think it’s fair to say that we see a very strong business inflow. We see a very strong business inflow despite a somewhat challenging funding environment for some of our especially biotech colleagues. And we also can already today see a very strong demand into 2023. So with this, so far, we do not notice any impact for a more compromised funding environment of biotechs. When we look forward, we expect several very important milestones, which allow us to overall confirm our strong business outlook for the rest of 2022. Page four also highlights some single events that are all supporting our unique business model. Cord will illustrate much more about this in his presentation, and Craig as well, but we are very happy that we were able to strike one of the largest extensions and expansions in targeted protein degradation ever together with our partners at BMS. We see several new integrated discovery INDiGO, CMC and sample management agreements. We are very happy about our long-term new partners, for example, Almirall in dermatology, Boehringer Ingelheim with our induced pluripotent stem cell, Eli Lilly on our molecular patient database, Janssen targeted protein degradation approach and also Sernova. We made noteworthy progress in many of our collaborations and here we want to highlight our neuroscience collaboration with BMS. We also see that Just-Evotec Biologics, which is still in its buildup phase and its initial investment phase is going the right path. You will see in Craig’s presentation that we are very happy with the overall projections here. Our co-owned pipeline is progressing very well and in addition to our amazing platform, we have added cGMP cell therapy manufacturing potential and capacity with the acquisition of Rigenerand, which will in the future be named Evotec Modena. Overall, our co-owning strategy is fully on track, and with this, we are also going down the path of further investing into highly promising companies like we have done, for example, with Sernova. We also have to mention lowlights in the last two quarters, especially strong headwinds from rising energy and material costs, and overall inflation are also, something which we cannot ignore and which are impacting our cost base a little bit, but this will not stop us. Another lowlight, of course, was the termination of our P2X3 antagonist by our partner, Bayer. Overall, our profitability going forward will accelerate with more milestones and here we see very good progress in many partnerships and our profitability will accelerate with more transactions to come where some of them are imminent. If you go to page number five, you can see that we keep the pace and keep our strategic direction. Page five gives you the summary of our financials and shows a slightly refined guidance. We see positive influences from FX that are impacting especially our topline to the positive side, and at the same time, we currently see unavoidable cost burden that are impacting our EBITDA situation, where it is especially energy costs and costs along the whole supply chain, which we cannot at this stage avoid. But as I said, again, this will not stop us. And of course, also these numbers reflect a major investment project that we have started with Just-Evotec Biologics, where we are building the most advanced capacities and capabilities in biologics manufacturing into the future. Craig and Enno will give you more details on this later. With this initial view of the company, let me hand over to Enno, who will give you a more detailed view on our numbers.

Thank you, Werner, and then I will start with all the details. First of all, however, a warm welcome to every one of you, it’s a great pleasure having you on the call here once again today. And let me start with the high level summary of our consolidated Group numbers. Six months 2022 numbers show an excellent 24% increase on our revenue line and revenue growth at constant currency rates stood at 19%. Gross margin amounted to 18.8%, below last year’s 20.8%. But it is important to note, as Werner just indicated, the investment state of Just-Evotec Biologics, which continues. So total gross margin, excluding Just-Evotec Biologics would have reached 27.3% versus 24.6% during the same period of the last year and this despite lower contribution from milestones, upfront and licenses and despite significant inflation. Group R&D expenses remained roughly constant with €36.8 million, thereof unpartnered R&D expenses of Evotec Innovate increased by 20%. The R&D spend in Q2 was focused on enhancing our multiple platforms, plus of course, the continued acceleration of our co-owned pipeline. The increase of €20 million or €21 million or 46%, respectively, in the SG&A expenses versus last year is mainly caused by increasing headcount in the global functions and higher depreciation of facilities due to Just J.POD, as well as our Biopark Toulouse, and furthermore, the new requirements in the -- in context of our U.S. listing impacted the numbers noticeably. And also, M&A expenses show an important deviation due to the unbudgeted consultancy and transactions costs, which occurred lately. The other operating income and expenses increased by €3.2 million and continued to be driven by tax credits and ID Lyon related reimbursement from Sanofi. Main reasons for the increased income were tax credits in Toulouse, France, and newly gained tax credits in Italy, which could be claimed from June 2021 onwards and hence had no comparable income in the first half of 2021. With a total of €33.6 million, our adjusted EBITDA lands within our expectations, but slightly below last year’s €36.2 million. This was driven by shift of cost structure, driven by investments in manufacturing capacity for our J.POD in the U.S., for example, high energy and material costs, M&A efforts, as well as the increase of the overall SG&A expenses. The net income shows further impact from fair value adjustment of the EVOequity investment in Exscientia. Here for H1 2022, we report a net loss of €101.2 million, and in the same half year, Exscientia’s share price dropped, which resulted in a non-cash loss from equity of €97.3 million. The next slide depicts our strong revenue growth of 24% overall, which was spread across all business areas. While this increase was supported by tailwinds from favorable FX movements and here, in particular, from euro versus U.S. dollars, we recognize at constant FX rates year-on-year very strong revenue growth increasing by 19%. The underlying business grew strongly by 26% to €330 million in H1 2022, while milestones upfront and royalty payments of €6.8 million were below last year’s H1 2021 numbers. Just-Evotec Biologics contributed revenues of €21.9 million in the first half of 2022. The underlying Biologics business recorded growth of 23% compared to the same period of the last year. The reported gross margin reflects our continued and accelerated investments into our precision medicine platforms, as well as the capacities buildup of our Just-Evotec Biologics, with continuous ramp-up costs related to this J.POD facilities and operations in the U.S. and in France. Also, overall inflation with significantly rising energy prices and more expensive materials, as well as increased logistic efforts or cost efforts for logistics made significant impact in Q2 2022. Let me emphasize again, total gross margin excluding Just-Evotec Biologics would have reached 27.3% during the same period of -- versus 24.6% during the same period of last year. So a good increase and this again despite lower contribution from the milestones and despite strong inflation. Both segments showed very strong growth versus H1 2022. Year-to-date, Execute revenues, including intersegment revenues grew by 26% to €351 million in the first half of 2022. Revenues were driven by strong base business, which stepped up to 21%, excluding Just-Evotec Biologics, it stepped up even 24%. EBITDA of Execute was €54.7 million, with a positive development and it is above the previous year’s level of €51.9 million. The six-month 2022 Innovate revenues amounted to €78 million, excellent 36% above last year due to continuous high demand for precision medicine reflected by expanded existing, as well as several new partnerships, as Werner just indicated to you. Higher base revenues of €17.6 million are mainly driven by higher FTEs in the BMS collaborations. However, and as a result of continued R&D investments, the adjusted EBITDA of Evotec Innovate remained as expected negative. Looking at the single quarter. Here, overall, my comments from the just made H1 2022 perception also applies for Q2 2022. The base revenues further accelerated in Q2 versus Q1 2022, as well as Q2 2021 in comparison and this accounts for across all business lines. So far we didn’t recognize any relevant impact from changing funding environment to reconfirm what Werner just described. R&D investments further accelerated and SG&A reflects further dynamic growth, scaling strategic projects and the U.S. listing. Adjusted EBITDA remained stable despite all the investments and extra costs. Slide 11 summarizes Evotec’s very strong non-P&L related financial KPIs, where we -- where I would like to guide you through. And here the balance sheet expansion resulted mainly from the revaluation of Exscientia to the downside, not affecting cash and being overcompensated by the US$200 million upfront payment received from BMS. The equity ratio is very strong with 55.6% and our liquidity position increased to €888 million, despite significant CapEx continuing and respective CapEx expenditures and equity investments. This will allow us to continue planned CapEx investments to support and accelerate growth projects such as J.POD U.S. and J.POD Toulouse, as well as general expansion of our capacities, technologies and platforms. Furthermore, we plan to continue our EVOequity engagements into new, as well as into existing equity holdings. Last but not least, trade accounts receivable decreased by €25 million and this helped to improve our DSO or so-called days sales outstanding figure for Q2 2022 to 59 days, thus being within our targeted corridor of 50 days to 60 days. And this completes my financial overview and I therefore would like to hand over to Cord. Thank you very much for your attention.

Thank you, Enno, and good morning, and good afternoon to everybody on the call. This time I am going to start my part of the presentation with a brief overview of our key drug discovery and development platforms. As you can see on page 14, they cover R&D efficiency, precision medicine, as well as all major drug modalities and also biologics manufacturing. I start with our R&D efficiency platforms, which pride themselves to be the most efficient and cost effective platforms of the industry in terms of -- and reach across the whole value chain. In addition to providing highly cost effective drug discovery, Evotec has developed also a suite of precision medicine focused drug discovery platforms. These reach from the unique and proprietary molecular patient database over iPSC-based patient-derived in vitro disease models to Omics and AI and machine learning-driven prediction of drug profiles via our panOmics and panHunter platforms. When it comes to drug modalities, we essentially cover all major drug modalities, starting with small molecules, antibodies, gene and cell therapy, antisense and even exosomes. Another very specialized and unique component of our drug discovery platform is our Just-Evotec Biologics manufacturing platform. Just-Evotec Biologics covers all aspects of antibody drug discovery from unique AI-based antibody design, which includes a generation of purpose-built fully human antibody libraries, but also product manufacturing. Our product manufacturing platforms we refer to as J.PODs and they cover product manufacturing design based on a continuous manufacturing process, which is unique in the industry. The next two slides will show that these platforms continue to deliver high value partnerships. For example, slide 15 shows that we have signed several new extended integrated drug discovery agreements based on our R&D efficiency platforms. Most notable, a recent partnership with Almirall in the dermatology space, which not only comes to significant research payments, but also includes significant upside in terms of milestones and royalties. On page 16, you can see the progress we have made on our precision medicine platforms. We have already signed five partnerships in the first half of 2022, all of which are driven by unique Evotec precision medicine platforms and come with, say, a huge financial upside for Evotec. The BI deal in ophthalmology, for example, is driven by our iPSC derived disease models. The Lilly deal in kidney disease, this is driven by Evotec molecular patient database, but also our abilities to develop disease relevant cellular models based on our iPSC platform. Similarly, we were able to expand our BMS neuro deal, which is also primarily driven by our iPSC platform, with new approaches to targeted -- to target key diseases causing proteins -- disease-causing proteins and the Janssen deal in dermatology is driven by a new approach to target in particular cell-surface receptors. Most importantly, though, we were able to extend and expand our BMS collaboration in the field of oncology based on our panOmics and panHunter platforms in the field of targeted protein degradation. This deal on its own delivered €200 million upfront payments and a huge financial upside in total more than €5 billion plus highly significant royalties for each and every program. As you can see, the precision medicine platforms are performing extremely well and we are very optimistic that they will continue to deliver more high value partnerships in the future. The next page, page 17, shows that we continue to make progress with our multimodality platform. In this case, the iPSC-based cell therapy platform. In contrast to most other cell therapy platforms, iPSC technology ensures a continuous and essentially limitless supply when it comes to manufacturing of cell-to-cell therapy product. When it comes to regenerative cell therapy approaches, insulin dependent diabetes is probably one of the most attractive indications. First of all, it is clear that insulin dependent diabetics suffer from insufficient insulin supply and that this can be rectified by either exogenous insulin injections or transplantation of human islets, which are, unfortunately, only available in extremely limited supply. Transplantation of insulin producing beta cells derived from iPSCs is the most promising potentially curative treatment, as the transplantation -- the transplant of beta cells can take over the function of the lost beta cells in the pancreas of diabetic patients. Many previous studies have already demonstrated that beta cells -- transplant beta cells is a highly efficient treatment in this context. So nowadays, it is mainly an engineering problem to supply the iPSC derived human beta cells at high quality in the most suitable device that gives the cells ample access to the circulatory system for them to be able to control that glucose levels then. At Evotec, we have demonstrated that we can produce iPSC derived human cells at highest quality. Through our recently announced partnership with Sernova, we identified the most suitable device for these cells for transplantation. The Sernova device comes with highly promising clinical validation data, which convinced us that they are the perfect partner for ourselves. Furthermore, more recently, with the acquisition of Rigenerand, we have now a facility, which enables us to manufacture these cells for clinical development and eventually for the market. As you can see on page 18 that the acquisition of Rigenerand, Evotec completes its fully integrated cell therapy platform based on iPSCs. Our cell therapy accelerator now reaches from manipulating and engineering iPSC cells into the appropriate cell type over the development of upscaling to quality control processes and all the way for GMP manufacturing. An outlook of what can be expected from Evotec in the cell therapy field is given on the next page, page 19. At Evotec, we continue to invest into iPSC cell therapy. The beta cell program diabetes is currently the most advanced program, but certainly not the only one. In regenerative cell therapy approaches, we are pursuing a second program in the field of cardiovascular disease with a focus on heart failure. In the oncology field, we are heavily investing into building a pipeline based on iPSC derived NK cells, macrophages, as well as T cells. Furthermore, we are pursuing immune modulatory approaches based on iPSC derived mesenchymal stem cells, but also other cell types. Overall, at Evotec, we believe that iPSC based cell therapies are extremely well-positioned to deliver on the promise of next-generation off-the-shelf cell therapies that were closely following the footsteps of current autologous cell therapies, who are primarily hampered by complex, usually non-scalable manufacturing processes. I will end here and hand over to Craig, who will provide more background on our highly promising biologics manufacturing business. Over to you, Craig.

Thank you, Cord, and welcome. Hello to everyone on the call for me. Starting on page 20, I’d like to take a few minutes to give you an update on the progress and the ramp-up of Just-Evotec Biologics. Let me start with a very brief reminder about Just. Just was founded on a mission to transform biologics development and today we remain convinced by and we committed to this ambition more than ever. Just-Evotec Biologics will transform biologics manufacturing and generate more accessible biologics medicines that matter through agile, flexible, cost effective and fully integrated discovery development and manufacturing with our partners. And this is all enabled by cutting-edge AI and machine learning technologies, and the most advanced continuous bioprocessing capabilities. Deploying the same proprietary technologies across all the geographies to bring manufacturing close to its markets is also a key element of this strategy. On this note, we are delighted to confirm that we expect groundbreaking of the first J.POD in Europe to commence at Evotec Campus Curie in Toulouse next month. Our investment in France alongside the continued expansion and build out of J.POD Redmond and ongoing investments in further technology developments, all point to a business very much at the initial investment stage and only at the beginning of its really exciting trajectory. This also explains the current short-term negative EBITDA contribution from Just-Evotec Biologics to the Group overall. The mid-term business trajectory is visible in a rapidly expanding sales pipeline, and as an example, we were delighted to announce yesterday the extension of our partnership with Alpine Immune Sciences. This partnership first started in 2020, in which we delivered drug substance using J.DESIGN continuous manufacturing platform for Alpine’s Phase 1 study and anticipated Phase 2 studies of ALPN-303. Under the newly expanded contract, Just-Evotec Biologics will leverage its data driven technology platform to develop a commercial manufacturing process, with a view to supporting potential commercial manufacturing of ALPN-303. This is both an important step and indeed an indicator of the future since we believe it’s illustrative of the outlook and future development of the Just-Evotec Biologics business. As our partner’s assets progress through later stages of drug discovery and development, continuous biomanufacturing becomes more and more important to support the increase in quantities of material, of course, but also crucially without having to change the process of scale up in volume. This is achieved, as shown on page 21, through intensification and continuous bioprocessing. This combination allows for greater massive protein per unit reactor volume and greater mass per reactor by extending the number of days from which continues bioproduction can be achieved. In addition, these advances reduce the traditional risks associated with scale up of reactor size, as well as allow for more rapid access to larger quantities, as the development phase of the asset progresses. On page 22, we are also pleased to report that our technologically disruptive offering is gaining a lot of momentum with our partners, and the diversity and the mix and the number of partners we now support is increasing, and the mix of partners is very reflective of the rest of Evotec’s partner mix in business, and with projects at various stages of drug discovery and development and across a range of indications. On page 23, we show the number of new deals signed in the first half of 2022 is approximately equal to the number of deals signed in the full year 2021, which implies a doubling of the rate of business acquisition. In addition, the value of these new deals signed is also significantly higher than last year and it should, of course, be appreciated that these deals are usually multiyear duration. So deal signed now, for example, will positively influence future revenues in 2023 and beyond. Therefore, in summary Just-Evotec Biologics is a paradigm shift to biologics development and manufacture. It’s still in its very early investment stages. We are investing in expanding capacity in the U.S. and Europe. The market response is very positive, business acquisition rate and the value of recently acquired business is rising rapidly, giving a very strong outlook for 2023 and beyond. And with that, I hand back to Werner to describe the co-owning pipeline. Dr. Werner Lanthaler: Thank you, Cord. Thank you, Craig. If we go to page 24 of this presentation, let me first remind you, it’s not only a strong base business and a very strong performance business that we are generating from our precision medicine platforms. Ultimately, we are building a large royalty pool. Today, in the future royalty pool, you have more than 150 co-owned assets that are progressing overall very well. Just to highlight a few of the more than 10 significant progression steps that you will see in the next 12 months to 24 months. Let me highlight, for example, our important progression in neuropathic pain together with Bayer. Let me also highlight that we are very happy with our eiF2b activator together with BMS in neurodegeneration. And let me also highlight that there will be a lot of progression from our preclinical pipeline into the clinic, for example, in virology. With this, knowing that a co-own pipeline build takes time, we are very happy with the overall progression that we see here. Page 25 shows you another feature of co-owning what we think are highly attractive assets into the future. Our strategy to co-own companies that create significant value is something that we have continued in the last two quarters and that we will continue going forward with investments into highly attractive companies, like, for example, we have done this into Centauri, into IMIDomics, into Sernova and also into Aurobac. And if you look at the overall strategy here, it’s of course, something where there will be volatile elements coming into the strategy through better performance or worse performance. But, overall, the portfolio and the synergistic effect of this portfolio is very strong. Page 27 highlights a different aspect of we -- of what we think is very important. We are not only a company, we are looking at Evotec as part of the society and with this evolving as a very important part of society and taking care of society, we keep our promise to take ESG very serious. Our first commitment on our science based targets gained traction and we see visibility here. Our commitments on the social front are important and let me highlight again here, for example, that it is the combination of Boehringer Ingelheim, bioMérieux and Evotec making the largest efforts in AMR research and development into the future. This is what ESG is about to create a more sustainable world and with this being a key player in infectious diseases in AMR is a true commitment that we are making here, and of course, we try to build and live up to best of governance. When you go forward, let me summarize where we are today by basically saying that we see a very strong business growing, we are especially benefiting from our U.S. contracts at this stage, which allow us to bring our guidance to €715 million to €735 million, at constant FX this would be €690 million to €710 million. We keep our very aspirational R&D commitment at the highest level of the company in its whole history at about €70 million to €80 million. And our adjusted EBITDA, as already mentioned, guidance is at €105 million to €120 million, which translates into €85 million to €100 million at constant FX rates. So despite favorable FX rates, we keep our nominal EBITDA guidance unchanged as unfavorable cost burden cannot be totally avoided in the company at this stage. Nevertheless, this will not stop us at all, and we see a very bright future ahead of us, which is also highlighted on the next page. With our mid-term goals, where, yes, it might look aspirational to go to an EBITDA level of €300 million, but don’t forget that the Just revenues and the Just profitability is kicking in a bit later. And that’s also why we are highlighting on page 30 a very strong new flow to come for the remainder of the year, but also already into 2023 and 2024 and 2025, because our R&D precision medicine platforms are delivering our integrated efficiency platforms are truly benefiting the industry and our Just-Evotec Biologics paradigm shift in biologics is ongoing as we speak. And as we want you to be part of that, let me first on the next page thank you for being part of our journey and let me wholeheartedly invite you on the 2nd of November to see and witness this paradigm shift of biologics with an in-person and also virtual Capital Markets Day that we will host out of our Redmond facility in the United States and you will get details with the save the date memo in the coming weeks. But I already want you to now to met -- mark your calendars to see the paradigm shift of biologics, as it starts in Redmond and is then going to lose very soon. With this, let me conclude this initial presentation, let me thank you for following Evotec and let me also thank you for supporting our mission and strategy, and of course, we invite you to questions.

Thank you very much, Doctor. [Operator Instructions] Today’s first question… Dr. Werner Lanthaler: I have…

… is coming from… Dr. Werner Lanthaler: No. I have the first question, Operator?

Go ahead, Doctor. Dr. Werner Lanthaler: So the first question, which came to me from Zoe from RBC, basically is what our current pricing strategy and how are we able to pass on costs currently? It’s actually quite an interesting situation that we do not see a lot of resistance of our partners to also follow us to higher cost and price levels. But what you have to see is passing on costs takes time, especially when the benefit of long-term contracts that we have closed, for example, three years to four years of -- ago cannot be shifted to immediate price increases. So I think for new contracts, we are very happy here with our alignment in business development, but many of the existing contracts, of course, have to be renewed to new prices, and of course, here all effects are taken, for example, to bring inflation adjustments into account and situations like that. And with this, I hand over to the moderator and ask for the next question.

Thank you very much, Doctor. Today’s first question is coming from James Quigley calling from Morgan Stanley. Please go ahead. Your line is open, sir.

Hi, there. Thank you for taking my questions and apologies if this is already covered in the presentation, but I had some trouble getting on to the webcast. But -- and so first, maybe one for Enno on the FX guidance, which seems to imply a 3.5% benefit on sales. And U.S. dollar strengthened by about 12% or so in the first half versus the euro and given that U.S. is about 55% of sales last year and seems to be in the same ballpark from the first half, I would have expected a greater FX tailwind. So is there any offset or timing of revenue recognition or anything that I am not sort of considering that would make the FX guidance of maybe implied 3.6%, 3.5% the right level? That’s number one. And then, number two. With the J.PODs, could you give us an idea of the cadence of investment here? So you have highlighted that there’s significant CapEx spend this year, so by the end of the year, how many of the six potential lines in J.POD 1 will you have online and can you talk about how you generally expect this capacity to fill up over time? I am just trying to get a sense of the gross margin impact in 2023 and how that flows through first half, second half and when that contribution could potentially become positive? Thank you. Dr. Werner Lanthaler: Thank you for your question. Let’s start with the second question on biologics and maybe, Craig, you illustrate this a bit better.

Sure. Hi, James. Thanks. Yeah. So the current situation in terms of capacity is that there are three trains operating, because we already had a train in J plant in Seattle, and of course, we opened two trains in J.POD. And as you indicated in your question, we are expecting those three trains will be fully running this year, of course, and we will fill up -- and the revenues and sales that we are achieving now will fill up those trains through 2023. But what’s also true is that we also see the dynamics of this business very favorable. And we will continue to invest not only in J. POD 2 in Toulouse and put the capital investment behind that, but we will also continue to build out and full build-out of J.POD 1 and indeed additional process development space, which is required as the precursing -- as the precursor capability before we are going to manufacturing. So there’s a number of investments, a number of continued build-outs that we will continue to conduct and invest in during 2023, as well as realizing the sales in 2022, which will land in revenues in 2023. So looking towards 2023 and EBITDA contribution, gross margin and so on. I fully expect that EBITDA will be much less negative in 2023 compared to 2022, because of the dynamics, the acquisition of the business and then the conversion of the sales onto the platform for revenue recognition, but offset by continuing investment and expansion of... Dr. Werner Lanthaler: Yeah. For quick completion, we, of course, as we speak, planning to implement the three additional trains where we have space in Redmond and are then implementing this capacity for 2023 going forward. Coming back to the first question, this goes to Enno.

Yeah. Great pleasure, James, to answer that. So in principle, I think, your assumption is in the right direction. I mean, in the first half of the year where we already experienced benefits from FX, obviously, the dollar was going up over time, so here we have seen in the beginning of the year higher amounts in particular still in the first quarter, and obviously, for the second half of the year, we are currently in our planning assume the dollar on a relatively high level in the range where it is today going forward.

Excellent. Thank you very much. Looking forward to coming up of developments. Thanks a lot. Dr. Werner Lanthaler: Great. So we already have the first guest investment. That’s fantastic. You see we will order already the cokes now. Next question, please.

Thank you. We will now go to Christian Ehmann calling from Warburg Research. Please go ahead.

Hello, everyone. Thank you for taking my questions. I have two at the moment. So let’s start with Innovate. So you showed quite a good ramp up of revenue generated by the current -- by the segment. Is this a run rate we could then extrapolate into the second half of 2022 and especially how does potential milestones especially from BMS fit or would fit into this calculation? And the second question would be in regard to the Department of Defense contract. Maybe you can give us an update on how the situation is there at the moment? Thanks. Dr. Werner Lanthaler: Yeah. So the first question will be taken by Cord. The second question will be taken by Craig. Let’s start with the second question.

Sure. Hi, Christian. And so thank you for asking about DOD. We, of course, continue very active and very lively and very good discussions with the DOD. We -- the -- we are within very mature stages of discussion about where we go next with them and we very much look forward to giving you additional details very soon. Dr. Werner Lanthaler: Thank you. And maybe, Cord, you gave a bit of an insight into your deal pipeline and deal expectations out of the Innovate.

Yeah. Maybe I will start and take one step back and just to -- sort of put it in relationship. So last year, we -- Innovate had a fantastic year with 50% organic growth in the business on the revenue line. This year 2022 with the first half delivering a growth of 36% on the revenue line is -- we are very happy with that at this point in time. And we -- as you have seen from the deal flow, we are very happy with the deal flow in the first half of 2022 and believe that we can add to this in the second half. So, once again, we too are summarizing this. We do feel that 2022 will yet be another fantastic year for you to Innovate. When it comes to a question about milestones, we can only repeat what we always say. We do not control the delivery of milestones or at least not completely, because some of them are just depending on technical success here and there on work -- biology working out. Overall, the milestone contribution in the first half of 2022 seems a bit low. But here I want to point to that we achieved a lot of milestones at the end of 2021, so some of them were actually sought to be delivered really only in 2022. And -- but, overall, I think, we have a good pipeline of potential milestones coming in and also in the second half of 2022 and -- but, overall, if they come or don’t come, we will -- believe we will have a very strong year for Innovate in 2022 overall. Dr. Werner Lanthaler: Thank you very much.

Thank you. Dr. Werner Lanthaler: Maybe to add one sentence to the discussion with the DOD, where I think it is important to see that this is especially also a scientific and technical discussion with a very sophisticated team of scientists and experts in process development. So if the DOD is validating a new technology, this is supporting what we are doing on this paradigm shift for biologics and that’s why this is a very important ongoing discussion, as Craig already mentioned. Coming to the next question, please.

Thank you, Doctor. We will now go to Mr. Steven Mah calling from Cowen. Please go ahead.

Hi. Thanks for taking the questions. So some of your peers have reported that, there’s been some delays in general hesitancy in pressing forward with R&D projects due to cash conservation reasons, given the macro environment. Can you give us a sense if you are seeing any similar slowdown trends in the core business? Dr. Werner Lanthaler: We wanted to also upfront mention this already in the presentation and we are very happy about this, that we don’t see a slowdown of our partner’s requests at this stage for what we are offering. And that’s why I think it is very important always to distinguish that Evotec is not a trivial, quote-unquote, exchangeable CRO than many others are out there. What we are offering to our partners are solutions that have true impact to increase the efficiency of what they are presenting. I think it’s, in some parts, even the reverse, that working with Evotec is making the partners, who work with us more efficient and with this they can deliver more data in shorter periods of time at higher quality. And with this, we are -- actually the answer to the funding problems that many of the biotech companies have out there and that’s why we think this is, at this stage, a positive situation for us that people are increasing, realizing the technological power that we bring to their questions and to their situations. That’s one aspect. And the other aspect is, of course, we have a very good balance of partners, which are large pharma driven and large pharma commitments to R&D are not slowing down, actually the demand for pipeline is increasing at many of the large pharma companies. We have a very strong hook to many of the mission-driven foundations, which are not affected by the funding environment and we have a very strong hook to many academic partners, who are also not affected by the funding environment as it is right now. When it comes to our biotech partners, I think, we should point out that many of the biotech partners who work with us are funded from excellent venture capital firms, who have long-term funds where the funds have been raised in the 2017, 2018, 2019 timeframe and where these funds are currently in spending mode for the next years. So therefore, also here, the existing portfolio companies are typically still very well funded. And that’s why if the funding environment is, I would say, picking up in two years to three years from now, then we are, at this stage, very well-positioned for all that we do here, and again, we are very happy about the situation.

Okay. Yeah. Thanks for -- and yeah, apologies -- yeah, I had issues getting on the call earlier. And then maybe a similar question regarding macro environment, I am talking about like new partner alliances that you guys are having inbounds on. Has that impacted how new partner deal structures are being evaluated, that is -- are you guys seeing less upfront payments and more back end economics or maybe a little bit of color on trends you are seeing on the new partner alliance side? Dr. Werner Lanthaler: Yeah. I mean when you look at that Evotec has been able to close the largest upfront deal ever in our history with $200 million upfront and a more than $5 billion volume from BMS. I would say we have, at this stage, a very good discussion, situation with our partners who value what we bring to them. That’s the first thing. And the second thing is being a cash flow positive and being a profitable company with more than €800 in the bank at this stage allows us to basically go for the optimal deal structures when it comes to upfront versus milestones versus royalties. And here, I think, we are benefiting from the strong balance sheet and the long-term customer relationships that we have. And by the way, we have a new colleague in our team, Matthias Evers, who will now optimize all of this even better than we have done it in the past together with the team that we have.

Okay. Great. Thanks Werner for the color. Dr. Werner Lanthaler: Pleasure.

Thanks. Dr. Werner Lanthaler: Let’s go to the next question and I hope you are also coming to our Redmond Capital Markets Day. That would be great.

Yeah. Dr. Werner Lanthaler: You see, already two.

Thank you, Doctor. We will now go to Derik de Bruin calling from Bank of America. Please go ahead. Dr. Werner Lanthaler: Great.

Hi. Good morning. I have two questions. I think one, and once again, I also got on late to the call, so apologies. But can you just talk through the puts and takes on the EBITDA guide relative to your initial forecast for 2022, just to make sure that we understand all the moving parts between FX, inflation, higher investment? And then I have got a follow-up. Dr. Werner Lanthaler: Great. Yes. And Enno will take this question.

Yeah. I think there’s a couple of factors, obviously, that we have to consider. We discussed already clearly strong tailwinds from the FX factors on the one hand side, which are contributing positively. We have, however, also on the other side, extra efforts going basically across several lines within our P&L. First of all, we are facing, like, most of the other companies today as well additional costs, in particular, in the field of increasing energy costs, which are up significantly. And this is obviously expected to continue also for the remainder of the year. The same is true for materials that we have to acquire and for more efforts and increasing costs in the field of logistics. That’s the one part. Within the SG&A part, we have the increase mainly on the additional growth of the organization per se scalability being coordinated. We have the impact, which was obviously planned, from the U.S. listing, which is now true for the first year and we clearly recognize this in our SG&A costs. We have additional M&A costs that are also visible within our SG&A parts from our last transaction -- transaction cost plus consultancy. And on the R&D side, as we reported, we also have an increase of cost, which is in total still not a very significant amount, but obviously, this is going to continue also for the second part of the year, as Cord also just reiterated. And these are the major building blocks that we are working on, and again, the additional cost that we have here is basically the major counterpart against the FX favor that we see on the topline. Dr. Werner Lanthaler: And maybe if I may add one, we also have the idea to keep our turnover rate at the company as low as possible to keep our high qualified personnel. So, with this, also increased cost for personnel has been quite impactful in the first half of the year and we don’t expect this to go away, because of course, all our employees are also facing higher costs in their living situations and that’s also where we invested there. The benefit of that is that we have a very low turnover compared to many of our peers, which allows us to grow long term much better other companies.

Okay. So that was going to lead on to my question, which was if you start thinking about 2023, how much of those additional costs will carry on until next year? Dr. Werner Lanthaler: Yeah. I think one aspect really here is that for 2023, as already mentioned, we so far see a very good understanding of our partners to also accept higher prices. So that’s why…

Yeah. Dr. Werner Lanthaler: … I think the cost pressure that we can share with our partners is something that we, at this stage, discussing and where we see a lot of understanding because they all understand the situation. So that’s why I think it’s an interim effect where these long-term contracts that have been locked in, we were not able to change and where new contracts we will be able to really adopt this cost situation quite nicely, of course, other costs that you are increasing now will not go away. We also don’t expect energy costs despite the fact that they will go down to go down to the levels where they have been before. We also don’t expect supply chain costs to go down to the levels where they have been before. And the other thing that you should appreciate, at this stage, we are expanding and with this investing at every site where we are. And also this will not be a situation, which can go away that easily or where costs will go down in 2023. So that’s why there will be some interim effect…

Yeah. Dr. Werner Lanthaler: … but not all of it.

Yeah. And I mean with regard to FX, we will have to see at the end of the year what the forecast will be from the different banks and what the estimates are. That’s hard to estimate, as you know, and I mean, last year, we had headwinds from FX and this year it’s a tailwind. So that’s something that we will have to estimate at the end of the year.

Okay. And if I can squeeze in one technical question, when you are looking at monoclonal antibody production using continuous manufacturing, I appreciate that the yields are much higher, but what’s the overall fully loaded cost like per gram on your process versus traditional batch fed for monoclonal antibody? Dr. Werner Lanthaler: Yeah. I mean it’s a bit of a wider question. With this, I maybe hand over to Craig.

Yeah. Thanks, Derik. And it’s a complicated question because of the nature of the way that one might typically calculate it, but the -- and because the continuous runs out of a certain scale and over a number of days, then generates a quite different way of looking at the cost. But nevertheless, we firmly believe that the expected, if you like, reductions in cost per gram for -- if you take a benchmarked antibody and then think about it under a continuous bioproduction analogy, because of course, different antibodies have different yields, we genuinely think that 50% reduction in cost per gram is achievable with a fully built-out J.POD running at high capacity.

Thank you. Dr. Werner Lanthaler: That’s one part of this and the other thing is, of course, with fully continuous manufacturing and the technologies that we are applying, we are opening markets for biologics, which at this stage, don’t exist, because for example, price is not something that you can show in infectious diseases and biologics. And with this, again, our continuous manufacturing process is not only a question of cost, it’s also a question of, how much material do you bring, how effective are you, and which indications can you open there also? For example, areas where cost is so far not allowing biologics to go in or where you can go for combination therapies where for many other technical reasons today you cannot go. So that’s why the range of what fully continuous manufacturing and our process or opening is extremely wide.

Thank you. Dr. Werner Lanthaler: Great. Next question, please.

Yes. We will go over to Falko Friedrichs calling from Deutsche Bank. Please go ahead, sir.

Thanks very much. Hello, everyone. Two questions, please. The first one on Just.Bio, just a bit more color on your ability to attract new customers would be helpful and whether there’s a growing pipeline with interested parties for your Redmond facility and also, if you are already seeing the first interest from customers to work with you in your Toulouse facility or if that is still a little bit too early? And then secondly, can you remind us of this agreement behind the partnered R&D portion that you have with Sanofi and how much longer that goes? Thank you. Dr. Werner Lanthaler: Yeah. Let’s take the first question first, and maybe Craig, you give an update here on the pipeline, and Enno, then takes the question on ID Lyon.

Yeah. Sure. Thanks. Thanks, Falko, for the question. I am not sure if you saw the slide in the presentation, if I can direct you to slide 22 and three later. But the -- what we have seen is a considerable step-up in doubling, if you like of the number of partners that we have been able to secure and sign up for future business. And I think one of the reasons why we see this is also because we have now got the J.POD up and running, of course, it was only opened 12 months ago. So that means that, 13 months ago, it didn’t really exist except in a storyline. But being able to go visit, see for oneself and as we have already done earlier in the call, invite people to come and visit for Capital Markets Day. It really makes an enormous difference to the understanding of the concept, the power of it and the attractiveness of the approach. And I think what we have seen in the uptick in signatures and the value of these signatures is really driven by the fact that you can actually now go and visit, see the team in place, see the technology in place, see it running through the windows in the ballroom, and therefore, the attractiveness to new customers is very strong. By analogy, of course, that means that it’s quite early for us to be able to make that visiting experience in Toulouse. But nevertheless, we are just beginning to build up discussions, which would lead to, for example, process development preceding work before manufacturing and we expect to be able to conduct that in Europe during the course of 2023, ahead of the opening of the new facility in second half 2024. So I hope that answers the question gives you a sense of it. Dr. Werner Lanthaler: Thank you. Second question to Enno.

Yes. So the context of this income and the other operating income is related to our ID Lyon efforts, where you may recall that a couple of years ago, we took over the site, including the respective teams and site and assets, and therefore, in return, Sanofi would cover not only the local cost but also certain costs for the projects running. This agreement in principle is in place until roughly mid-next year and there’s a certain bucket behind it of financing that we utilize, and here we are well under plan to have this utilized somewhere between end of this year and mid of next year. So that’s the period when it’s running out. What is important to notice that -- and maybe, Craig, you want to comment on that on top, is that we then obviously, and this is underway already, we will transition the team that is working here on these efforts into the Execute efforts so that they will not land as cost under R&D, but are meant to be part of our Execute business going forward. Dr. Werner Lanthaler: And I think here to illustrate this more than 80% of all the costs and all the people in our infectious disease efforts are already on customer projects, as we speak or on long-term R&D projects. So with this and the transition we are very happy on the progress here and we don’t expect any negative or major negative impact from this ending.

Perfect. Thank you. Dr. Werner Lanthaler: Next question please.

Thank you. We will now go to Joseph Hedden calling from Rx Securities. Please go ahead.

Good afternoon. Thanks for taking my question. It’s just on the acquisition of Rigenerand, just interested in what attracted you to the cell therapy capabilities of this particular company? And then would you expect the capacity that Rigenerand has is going to cover all of your current planned activities in cell therapy or is this more of a clinical stage venture on this side? Thank you. Dr. Werner Lanthaler: Yeah. Maybe given the importance of cell therapy and the product and the process link here, it would be great, Cord, if you can describe one more time why we felt so attracted to integrate this.

Yeah. So, I mean, let me start by saying that there currently are no companies out there that would cover adequately an iPSC or the development of iPSC based manufacturing processes that could go for the clinic and all the way into the market, because it’s -- all of this is very much linked to the process and that is being developed for bespoke cell types and based on bespoke GMP compliance, et cetera, PP. But what attracted us to the site in Verona is very simply. It’s a fully integrated setup site for cell therapy. They have a product that is in the clinic already and we basically can now start implementing our processes into the site in a very flexible and fully controlled manner. And on top of that, we have room to scale for the future. So these are essentially the key parameters, which really attracted us here. Dr. Werner Lanthaler: And of course, it’s a fantastic synergy to have an internal pipeline going into this process for clinical use and large clinical use, and opening the site for external partners, which we are doing as we speak and that’s why it was very important, what Cord has shown you on the cell therapy pipeline that we are building here, because here we have a true offering to progress on the same platform when our partners are making their diligence visits together with us. With this, next question.

Yeah. Doctor, we only have one question queuing at this time, sir. And we are going to go to Christian Ehmann from Warburg Research. Please go ahead. Dr. Werner Lanthaler: Hi, Christian.

Hello, again. And I have a question regarding potential power cuts. So we talked a lot about the risk in Germany, especially, but the U.K. has now plans to potentially cut power to the industry in January next year. Could you give us an idea how your -- how big or how small your exposure is to these kind of disruptions? Thanks. Dr. Werner Lanthaler: You can imagine that this is a question that is on our risk management portfolio top of the list and that’s why Enno is super qualified to answer that question.

Thank you very polite of you, Werner. No. Happy to answer your question, Christian. Obviously, first of all, we -- you have to analyze the respective different countries and going across the Evotec landscape, if you will, we currently despite the latest news from U.K. perceived Germany and Italy as those countries which have the most attention today from our side, whereas other countries and here, in particular, the U.S. are probably more stable and then we try to break it down to the risk on the respective sides of relevance. And as a matter of fact, there’s, obviously, measures on how we can reduce energy consumption already today, but also going forward what we can do with our employees and with our partners, that’s the one consideration. The other one, what alternatives do we have within the group to shift work, if possible, to other sites in case, for instance, in Germany, we would have to reduce, but still have availability in France and U.K. This obviously can only be applied for certain parts of our activities, not for everything. And thirdly, and there is also a key consideration is how can we get on the radar of respective organizations that we obviously have a high priority in the way Evotec is being treated with regards to energy availability. Here as an example, during obviously the main cohort periods, we obviously also had good collaboration with certain authorities, for instance, in Italy, and something else we are also working on. But to be fully transparent, there is not on a short notice or on short-term coverage that will cover this risk 100% under our aspects. Dr. Werner Lanthaler: Thank you very much. I hope this answers your question. And I think it highlights that the world of today is a bit more complex when it comes to questions of running a business than it was maybe nine month to 12 months ago. But, overall, it is fantastic to see that the idea of Evotec is stronger than ever, and also with this, the response and the partnerships that we can create are really stronger than ever. And just taking your example of energy, here it makes a huge difference if you, together with your partners, can lobby for a prioritization slot in energy prioritization, for example, in certain countries, which we clearly have started already at the beginning of this discussion and that’s also why we think that we are here in a very good position. With this, if there are no further questions, let me thank you again. Let me thank you for your questions, let me thank you for your notes and let me also invite you to Redmond again. There are already two people coming. So with this, the event is almost full. But we will open a slot for you immediately when you send us a note and after the save the date note will go out to you. Thank you very much and have a great day.

Thanks very much, Dr. Lanthaler. Ladies and gentlemen, that will conclude today’s conference. We thank you for much of your attendance. You may now disconnect. We wish you very good day and good-bye.