Good morning, good afternoon. Welcome from Evotec. Welcome to our Q9 presentation for Together for medicines that matter. We have uploaded the presentation that is accompanying this call to our website, and you can follow this call throughout the next couple of quarters. When you go to Page 2 of this presentation. You can see that I'm here together with my team, our CFO, Enno; our COO, Craig; our CSO, Cord; and our CBO, Matthias. Enno and I will guide you through the initial report, and then we are all looking forward to your questions and are happy to answer that. As you know, this call follows our second Capital Markets Day of 2022, which we had last week in Redmond and which was focused more or less only on Just - Evotec Biologics. So we are very happy to today give you a broader picture about the whole business ongoing in the group. And we will also, at this point of time, of course, refer to Just - Evotec Biologics. But if you have more detailed questions to Just, let me please also advise you to go to the Internet where we have now uploaded the webcast of this presentation and where you can really follow this Capital Markets Day. Let me also thank you very much for attending this Capital Markets Day and your excellent questions around this. So let's go into our business, and let's go into Page number 4. And let's look at the latest highlights and also lowlights of the nine months report of 2022. We are focused on execution, acceleration and it's fantastic to see that we see undisrupted demand in all sectors of our business. This is best reflected by new and extended discovery and development agreements and also highlighted by some so far smaller milestones, but milestones are coming in. We see significant progress in neuroscience, especially in our collaboration with BMS. Why is this important? Because I think we all realize that CNS will be one of the most important areas to focus on in the next decades to come. Here, we hold together with BMS, a leading position in the field based on our [iPSC] platform technologies. When it comes to another highlight, yes, we highlight Just - Evotec Biologics despite the fact that we are in start-up mode. But our collaborations that we signed recently and our two contracts from the DOD that we have been committed by this fantastic institutions show us that we are truly representing a technological paradigm shift in Biologics. And with this, we look forward to not only filling our J.POD 1 investment, but also we are looking forward to filling our J.POD 2 in Toulouse, which we have started to build in the latest month. We have closed the acquisition of Central Glass Germany, which will in the future operators, Evotec Drug Substance and which we are very proud of because it is a logical cross-selling continuation of our value chain in the field of APIs. On our molecular patient databases, what we abbreviate with E.MPD, it is fantastic to see that we are making here great progress and that we are expanding our molecular patient databases for example, as we have done with their Hannover Medical School in autoimmune diseases. This is all based on our technological leading-edge software that we have launched commercially called PanHunter. This is Omics-driven data analysis and data integration, which is world-leading and where many scientists throughout all labs in the industry will have a lot of pleasure to use this tool in the future. Let's also not hide lowlight. Yes, we see delays in milestones, and we see a slower revenue recognition process, which comes from the scaling of especially our Biologics business. But this doesn't stop the Company at all. And yes, we see headwinds from rising energy costs and material costs and, of course, also from overall inflation. But I think on the second point, we are not alone with many other companies in the whole industry. If you go to Page number 5 of this presentation, let us again first highlight that we see undisrupted demand from all industry sectors. We want to especially highlight this because many people are talking about the slowdown of biotech funding and talk about biotech funding crisis, which is true, but in part, it's not true because Evotec is a high-quality organization is reflecting the answer for many of these companies where the switch from fixed cost to [indiscernible] cost is making them more efficient. And that's why for many companies that are currently suffering from this biotech funding crisis, Evotec could present the answer. With this, it's easy to explain by our revenues are going up by more than 19%. And we are -- even if we adjust for FX effect, our growth is very impressive. When you look at our adjusted EBITDA, it's, of course, a slow growing EBITDA this year and especially compared to last year where we had much better milestones and upfront in Q3. It's down by 36%, which, again, we have to and will try to correct in Q4. Just - Evotec Biologics is in a start-up phase, and therefore, we always want to highlight the dynamic of this business that, first, of course, we have to invest until we then see the revenues increasing and with this also profitability kicking in as we have always projected. Adjusted EBITDA is, of course, also here very strongly impacted by energy costs, material costs and also by M&A-related costs, as Enno will show you in the couple -- in a couple of slides. If we would adjust our EBITDA to take out Just - Evotec Biologics, you see the number is quite good and is really in order where it should be by growing about by 14%. If you look at our overall guidance, we are confirming our overall guidance where we see very good top line growth, and we still expect top line growth to be in the range of €715 million to €735 million. We will accelerate our R&D investment for sustainable growth into the long-term future of Evotec and has not stopped to invest in R&D or have not slowed down to invest in R&D. And when it comes to our EBITDA, I think it is clear that Q4 has to deliver significantly, and that's also what we will lay out through this call where we are confident that this will be possible. If you go to our financial performance, let me hand back to Enno to bring you a bit deeper into our numbers.

Yes. Pleasure to do so, and a warm welcome to everyone also from my side. Thank you, Werner. And starting on Page 7 with a summary of our group consolidated numbers. Revenues increased by a strong 19% to €511 million, and this despite significantly lower milestones upfront and license payments with more than 50% of revenues denominated to USD, we experienced significant tailwinds from the strong USD against the €in particular and revenue growth, excluding FX effects was at 13%. The gross margin amounted to 17.9% for the first nine months of 2022 and decreased from 23.1% in the previous year due to high ramp-up costs of the Just - Evotec Biologics business and a low contribution from milestone revenues, as already indicated before. Furthermore, inflation with significantly rising energy prices, more expensive material costs as well as increased logistic costs had a significant impact as well. The group R&D expenses remained nearly constant with €55.3 million versus last year of €53.5 million. And therefore, or thereof unpartnered R&D expenses of Evotec Innovate increased by 19%, various partnered R&D expenses decreased. The SG&A expenses amounted to €110 million and were thus €38.9 million or 55% higher compared to the last year. And expanding Evotec's number of employees to facilitate further growth, the U.S. listing from last year as well as fees for consulting services were the main cost drivers. The respective consulting costs were incurred mainly due to the preparation of our SAP implementation, which we started in 2022. New requirements in context of the U.S. listing, for instance, SOX implementation and M&A activities. The other operating income and expenses increased by €5 million and continue to be driven by a tax credits in particularly in France and Italy as well as Sanofi related R&D recharges. Please bear in mind, next year, we will only have the contribution from Sanofi for ID Lyon in the first half of the year as this collaboration will expire mid-2023. With a total of €44.6 million, our adjusted EBITDA has been influenced by investments to increase the growth and the value potential of Just -- J.POD as well as low contribution from milestones, upfront and licenses plus again experiencing strong inflation headwinds. For the first nine months of 2022, we reported a net income of minus €48.5 million, which was influenced or mainly influenced by share price adjustments in our EVOequity investment in Exscientia. Here, Exscientia's share price dropped from €19.76 per share at the end of 2021 to $8.21 per share at the end of Q3, which then resulted in a noncash loss from equity of €126.7 million. On Page 8, the next -- this slide depicts our continued strong revenue growth of 19% overall, which was well spread across most business areas. The base business stood at €502.7 million and continued to show very strong growth of 27%. Milestones, upfront and royalty payments of 8.1% were significantly below last year's number at the same time, which then stood at €36.5 million, including the €20 million milestone from BMS, which we received at that point in time. Just - Evotec Biologics contributed revenues of €27.9 million in the first nine months of 2022, compared to €34.7 million in the same period in 2021. Therefore, growth of the group's base revenue, excluding Just would have been or would have stood at 32%, which is quite significant. The gross margin, excluding milestones and excluding Just - Evotec Biologics stayed at 26.5% versus 21.7% in the previous year's period, once again confirming our very healthy base business going forward. That said, total gross margin only excluding Just - Evotec Biologics would be at 27.3% and thus in line with the last year's 27.2% despite lower contribution from milestones, as mentioned before, as well as increased energy cost and inflation also as mentioned before. The bridge on the net side or the EBITDA amounted to €44.6 million, as I mentioned, and decreased by 36% against previous year. That said, and while at nine months 2021, the Just start-up impact was not yet so significant. Year-to-date 2022, the adjusted EBITDA adjusted again for the Just J.POD start-up impact would total €84.6 million and consequently reflect again, growth of 14% or €10.6 million compared to the first nine months of 2021. Considering tailwinds from FX after nine months, this shows a positive contribution of €12.4 million is calculated on the basis of the previous year -- previous year exchange rates. Both our segments reported solid top line growth revenues versus the last -- or the first nine months of 2021 and the year-to-date [Execute] revenues, including intersegment revenues, grew by 23% to €526.7 million in the first three quarters. Revenues were driven by strong base business, which stepped up 18%, excluding Just - Evotec Biologics, in 23%. The adjusted EBITDA of the Execute segment was €75.8 million and was impacted by the ramp-up cost of Biologics. The previous year Execute reported an EBITDA of €87 million for exactly [value]. nine-month '22 Innovate revenues amounted to €122 million, which is significant 20% growth compared to last year due to continuous high demand for precision medicine reflected by expanding existing as well as several new partnerships. Higher base revenues of €29.6 million were, among others, driven by the increased FTEs in the [CMS] corporation, which we utilize there. However, and as a result of the continued R&D investment and the lack of milestone revenues, the adjusted EBITDA of Evotec Innovate remained as expected, negative. Looking at the single quarter, Q3, overall, my comments for the first nine months that I made on the previous pages, also apply accordingly for Q3. Base revenues further accelerated this quarter versus Q3 2021 across all business lines. So far, we didn't recognize any relevant impact from changing funding environment, as Werner described already before. However, milestones, upfront and license revenues contributed relatively little compared to a strong Q3 of the last year. This also explains the change in gross margin aside from inflation-driven cost factors that we indicated before. SG&A reflects the further dynamic growth, scaling, higher energy costs and strategic projects, in particular, M&A. As a result of the above, the adjusted EBITDA decreased to €11 million in Q3 coming from €33.9 million in the last year's Q3 and excluding Biologics, once again, the adjusted EBITDA would stay at the previous year's year level. Slide 12 summarizes Evotec's very solid and sustainable non-P&L related financial KPIs and the slight balance sheet expansion resulted mainly from the revaluation of the Exscientia on the negative side, being overcompensated by the USD 200 million payment or prepayment from BMS received in May 2022. The equity ratio decreased to a still very strong, 54.3%. The liquidity position decreased slightly to €823.7 million despite significant CapEx expenditures and equity investments and still reflects a very strong position. So the strong liquidity will allow us to continue planned CapEx investments to support growth projects such as the U.S. J.POD and the J.POD in Toulouse as well as the general expansion of our capacities technologies, platforms and, of course, our EVOequity portfolio. And with this, this completes my financial overview, and I therefore would like to hand back to Werner. Thank you very much.

Thank you, Enno. If you go forward to your Page 14 of this presentation, let me just summarize again for you what are our focus areas to accelerate growth in leadership for profitable long-term growth. We are building a PanOmics platform for better disease understanding and more precise medicines. We are leading the field of iPSC-based drug discovery and cell therapies, with Just - Evotec Biologics, we are highlighting the disruptive power of fully continuous manufacturing. And this is all based on an end-to-end shared R&D continuum where we can basically execute every experiment that the industry needs to progress on all modalities. If you go to Page number 15, you see how we are slowly with our PanOmics platform going broader and deeper into many of the disease areas and the partners where we are acting. So with this, the two new programs identified in our BMS collaboration in neurodegeneration are just a highlight of our access to more and even deeper insight in disease areas where we will expand this technology in the future. Expansion is also the key word for our molecular patient databases because here, building strong database is the basis for a portfolio of transactions that we are building in many disease areas and PanHunter is a tool to really integrate and analyze data is essential to understand and with this to better disease understand in every aspect of our activities. PanHunter is launched, and it will take a while, but you will see that the offering of Software as a Service will allow us to have even more partners closely linked to the technology powers that Evotec can offer. If you go to Page number 17 of your presentation, we just want to highlight that building an iPSC-based platform for drug discovery and for cell therapies is just at the beginning, but we feel very confident with our recent moves that especially in cell therapy. Evotec will enter the map of globally leading cell therapy iPSC-based players when it comes to off-the-shelf solution. If you go to Page 18, it's just again, calling out how proud we are of our Just - Evotec Biologics build out and build of J.POD that is at the starting point in Redmond and at the starting point Toulouse. And when we say starting point, we can today, as you see on Page number 19, report back to you that the initial basis for growth, which are basically endorsements of partners with their programs, has started and is picking up, not only in its number but also in its breadth when it comes to disease areas. And with three programs added in Q3 alone and another DOD award, we see that it took a while, but the pickup of Just - Evotec Biologics is taking place, as also highlighted on Page number 20, where we have already tripled our sales compared to '21. And yes, it's a disappointing Q3, which only €6 million revenues can recognize. But you will see that this is going up very nicely. And I think this was the lowest point of revenues that you will have ever seen on Just - Evotec Biologics in one quarter into the future forever. Let me highlight again our new partnership with the Department of Defense, where in a very fierce competition for technological leadership, Evotec has won the second award, and we will disclose by the end of the year, the size of this award, which is considerable. And with this, again, 2023 will be the starting year of significant growth also for Just - Evotec Biologics. If you go to Page 21 in our base business, it's great to see that we cannot only extend but also go deeper in various drug discovery and development partnerships and cross-selling into the development part of the value chain is what we are doing when it comes to integrated CMC. And here, for example, expanding these organics and other, especially orphan drug and smaller drug substances companies is making our way into a very, very important segment for more precise medicine. We also want to highlight the strong performance of our DMPK/ADME-tox testing business, which we -- to the outside often represent a Cyprotex because here we are owning and here, we are driving the leading brand when it comes to safety predictions and also when it comes to ADME-tox services. When you go to Page 22, let me highlight again that we have closed our recent acquisition in Halle in Germany, which is basically allowing us in the field of drug substance to service our partners much better in a fully integrated fashion from discovery into development into the market when it comes to drug substance. When you go to Page 23, you see that our Evotec Insight power reflected in building out a pipeline where we always own royalty rates and milestones without taking the risk of clinic development is growing forward. And yes, we have lost P2X3 this year but there are more than 140 projects that we co-own and that are all moving forward with the investments of our partners. As you can see, we also see some of the projects now entering approval state and these are small projects, but they show that the principle of building a royalty pool is fully intact and working. And for example, with a COVID-19 project, which will go forward in Korea, where we contributed a very important part of this product. We see that a product where Evotec did some important work and has access to royalties will be approved in certain parts of the globe in the future. And here, we expect important [indiscernible] to come also in the next couple of quarters. When we go forward, you will also see that the number of data points is very strong in '23, '24, '25, leading to this royalty pool that we always have envisaged out of our Evotec Innovate business. On Page 24, you should see that we still see a lot of good opportunities to invest in our operations in logistic companies or into platforms where we see a true leverage of what we are doing at Evotec. So that's also why we are very proud of some of the progresses that our companies that we go on are making. Having said that, we also see the volatility of some of our especially public holdings like mentioned before by Enno in Exscientia or Sernova. Going forward, with this, I want to highlight again that our co-owning strategy goes from academia to more mature companies and is just the starting point of building a very strong portfolio. Page 26 of this presentation highlights again and we talk about ESG and sustainability, we talk about ESG as a competitive tool and a competitive weapon for Evotec because we see that committing ourselves to environmental targets is an important contribution to the inside of the Company, but also to our value chain and our supply chain. We see that committing to social goals is helping us internally, but also is highlighting our contribution to the world, for example, in the field of -- into microbials. And we see by running a company with the best of all potential governance is helping us to guide the Company into a growth phase and having here processes under control because that's what government does for us. When we come to Page 27, let me again highlight our guidance of this year. Let me again highlight that we are on a good track to achieve our top line when it comes to €715 million to €735 million revenues. We are on a good track to invest into unpartnered R&D for long-term growth. And we are confirming our adjusted EBITDA, but we, at the same time, on Page 28 going to highlight that it will take a lot of effort and a strong finish for the year to achieve our EBITDA, and we want to be fully transparent with you, that we have to achieve significant milestones, upfront and licenses, which is highlighted here, where we have a lot of ongoing discussions for new transactions and where many milestones are in reach and will read out, especially in December. We see strong traction on our base business, which is really highlighting the operational leverage, which will come in also from the closed transaction in target import integration, which is now picking up speed and this also will contribute more EBITDA in the fourth quarter than it has done in the second and third quarter and we are very certain that we are close to a turning point of Just - Evotec Biologics, which will reduce the EBITDA impact that you see that. With this, we are very much looking forward to building out Evotec, as you see on Page 29, for long-term growth we see that our goal to achieve €1 billion in revenues is actually doable despite the fact that we see very challenging biotech overall funding environment, but we see that we are in a superior path here to many other companies. And we also see that once Just - Evotec Biologics will kick in and our milestone contributions will kick in that our adjusted EBITDA will be possible to bring to a level of about €300 million in 2025. Most importantly, building out our co-owned pipeline to a massive royalty pool is ongoing as we speak, and that's the reason why we are investing into unpartnered R&D also within our action plan 2025. With this, let me close this discussion and then open for your questions by basically highlighting that we expect a strong news flow to come on our R&D efficiency platforms, on our precision medicine platforms and within Just and this will continue not only for Q4 but also way into '23, '24 and '25. And with this, let me thank you and highlight on Page 31 our dates for '23, and let me thank you for following Evotec, and we are now looking forward to all your questions for this quarter and into the future. Thank you so much.

[Operator Instructions] First question is from the line of Zoe Karamanoli with RBC Capital Markets.

My questions are regarding Just - Evotec Biologics. So the number of customers and projects you have signed with Just have increased, but you reported decreased revenue in Q3 compared to Q1 and Q2. So can you help us understand how we should think phasing of revenue contribution within Just from your existing projects? And then as a follow-up, you started to have a lot of projects towards the end of Q3. And maybe this revenue has not come through yet. But why would the revenue from the previous projects go down? Are there any factors that influence revenue recognition? And that is then implied that in order to have more recurring revenue streams within Just, the number of customers must increase substantially?

Thank you so much. And with this question, we go to Craig to bring [indiscernible]?

Sure. Absolutely. Thanks, Werner. Thanks for the questions, Zoe. Your -- you are, of course, right that the revenues have been going down during the quarter, and it looks like a trajectory. But as you also have seen and heard the amount of sales that we've recognized during the course of 2022 has tremendously increased over 2021. And with quite a long contract duration, then inevitably, it takes some time before the sales land into recognizable revenues during the course of the ensuing 9 to 18 months there after the sales closed. So what we see, in fact, is a consequence of phasing of revenue recognition during the course of this year, where certain lines of work have been completed and the ramp-up of J.POD and manufacturing capacity in Redmond with the opening of the facility, which was only 12 months ago. So what we expect and anticipate is that, as Werner said, Q3 will be the lowest point in that curve and that we anticipate a very strong Q4 in revenues as a result of the sales from earlier in this year. Obviously, with sales increasing three-fold over last year, even with our revenue recognition path over multiple months and years, we absolutely expect that revenues in Q4 will go up significantly over Q3 to the tune of perhaps three-fold. Is that addresses the question?

Yes. So yes, so you don't think that the number of customers must increase substantially?

Yes. No, you're absolutely right. And of course, the reason that we're openly disclosing the sales is because we also recognize that in order to get to our revenue ambitions for Just - Evotec Biologics of course, the sales volume absolutely needs to go up significantly. That can be done not only through an increase in the number of customers, but also the magnitude of the contracts that we closed -- the magnitude of the value of the contracts we closed, and that's exactly the kind of business mix we're striving for, significant strategic partnerships plus a higher volume of closed sales.

Maybe if I add before we go to the next question. What is essential for us is the quality mix of our partners where we are from an opportunity perspective. Allowing the best capacity that we have built to go. And that's why we are deliberately going here for a high-quality strategy because this will then show us very high-quality revenues in the future. And I think that will also come through in '23 as well. Maybe we go to the next question, please?

Next question is from the line of Christian Ehmann with Warburg Research.

I'm kind of trying to get an idea about the moving parts you have for reaching your guidance. So as I said, you need a considerable step-up in earnings in Q4 and what kind of probability would you assume? So do you need all those kind of milestones you expect to come in to actually reach the guidance? Or do you -- are you in a space of like 60% of those are fine to reach our guidance? Or what are the moving parts here? And what is the potential to actually also fail to reach your guidance in this fiscal year? The second question would be then to the kind of visibility you have. So what are the lead times on these -- on your small biotech customers where you can say, okay, we would expect now a decline in funding decline in general biotech funding would affect our top line? And these would be the first two questions I have.

So let me on the guidance, probably be very clear that biology will decide on this milestones come in or don't come in. So there are significant ongoing experiments at this stage, which will lead to biology readouts, where if these are positive readouts then a milestone will be achieved. If these are negative readout, then a milestone will be not achieved or if it's unclear, then a milestone is just delayed. So it's all in the process. And can only be confirmed about the -- at the end of the year when we have clarity on where the experiments are lending. That has always been the case. That's part of our business model, that milestones are part of the EBITDA driving events. So that's how you should look at this. And there are smaller milestones and there are larger milestones, we typically, at the beginning of the year factor in not all of them to be successful. So we have an attrition model behind it, which we don't disclose the outside, of course. But what you, at this stage, should see that it's possible and that's also why we are confirming guidance, but we also want to highlight that the volatility of experiments we cannot control. When it comes to visibility of biotech funding on our platform. Here, I think for '23, we are on top line growth, very confident because we have for many of our partners, long-term visibility, the average contract time is 18 months. So we are very confident that a double-digit growth into '23 will be possible from what we see today. And that's also why the mix of pharma partners, biotech partners and mission-driven foundations is allowing us to really counter balance, if one group is a bit weaker. And -- for example, mission-driven foundations have no impact at this stage from funding, and they are even increasing the exposure to Evotec because they're very happy with our deliveries that we bring into, for example, the Huntington Disease Foundation or into the Parkinson's Foundation and other of these groups. With pharma, we even see an increased demand because we are one of the platforms where pharma has due of the pandemic learned that platforms like Evotec are continuously delivering. And with biotech, here, we are working with a lot of groups where they still have very good funding situations from their venture funds who raised significant amounts of money in 2019, '20, '21 and where these funds are typically given out over the course of five to six years. So also here, there's a, I would say, a split in biotech funding into the very well-funded battery companies and those who are struggling. So if the year '23 at this point would be looked at [isolated], we also don't expect that basic funding will be a major hit for us. If this environment like it is today will continue throughout the whole '23 and in the beginning of '24, then we would also probably see an impact. But then the nice thing about the way we are building the Company is that we can adopt capacities which we would then do -- at this stage, we don't do this because at this stage, we assume quite strong growth. I hope this answers your question.

Next question is from the line of James Quigley with Morgan Stanley.

I've got three, please. So firstly, a quick one, could you give us an idea of the impact from the Sanofi ideally on other operating income that you expected for 2023 for the first half of 2023? Then secondly, the gross margin development for the base business, excluding Just Bio have been pretty strong. Part of that is FX. But what are the key factors that we need to consider around the margin for the base business as we look into 2023? And sort of how sustainable is this level of gross margin given things like inflation? Part of it is impacted by Milestone, et cetera? And then the third question on Just Bio. So a follow-up on Zoe's question on revenue recognition and the trajectory. You mentioned in Q3 should be the trough. Q4 could be quite strong. But as we look out further, how should we sort of think about the sort of quarterly progression? Should we think about it being sort of fairly lumpy, in line with [indiscernible] projects, should we expect it to sort of be fairly smooth in terms of smooth from here or any other sort of patterns?

First question goes to Enno. Second question and third question go to Craig.

Okay. Then I come back to the Sanofi ID Lyon question, where we have so far year-to-date, seen roughly €27 million out of the other operating income being derived by that. And this kind of goes pretty continues over the quarter. So it's roughly in the range of €8 million to €10 million per quarter. And then if you assume that for the first two quarters of the next year, then I think you should have a good orientation for what the impact is here under other operating income.

Okay. Thanks, Werner. James, in terms of the gross margin, you're absolutely right. I think it's a significant step-up, and that's despite some negative factors, which are already kicking in even now during this year, as you understand, inflation cost materials and indeed energy. So looking ahead, we very much expect that our gross margin will -- will be maintained. It's a sustainable increase and it's an improvement. And that's during a period where the contribution of milestones in 2022 so far, the year so far, has been relatively modest. Behind that, the factors behind that are increasing prices to a certain extent, but also operational excellence interventions which we've been very much concentrating on, as you can imagine, in the -- given the current trading conditions. So I hope that answers the question about gross margin. And then in terms of Just - Evotec Biologics, one of the things that you've rightly identified is that the revenue recognition is currently a bit to use your word lumpy. And a feature of that is when we're in start-up phase as we are, then the completion of projects and the volume of projects and the replacement rate of projects does lead to a somewhat lumpy characteristic as we've seen earlier on in this year. But -- what we also know from all the rest of our business here is that the bigger the volumes become, the less erratic the revenue recognition becomes. That's a perfect understand I think from a process point of view, and so looking ahead, I think based on the sales volume that we've seen in 2021, and we continue to have very active and positive discussions for further sales, then we would expect that the revenue recognition might remain not exactly smooth and it should smooth out a bit compared to 2021, looking out into 2023.

Maybe Matthias, if you can give a bit of a flavor on Just - Evotec Biologics, how customer segmentation looks into the years to come and also with the contributions to come?

Thank you very much, Werner. And [indiscernible], James, to your question, I mean, one way to think about this is also that we deal with a number of customer segments has also introduced at the Capital Markets Day. So we have seen demand from the biotech segment, and we have been speaking about the first in human, the early clinical trials. And those evolve, of course, from early clinical supply, later clinical supply eventually also commercial supply. That is a right as introduced with selective demands over the years, of course, also attrition adjusted because some of these projects will fail. And that gives us a relatively smooth curve. And for that story, we, of course, increase also the number of customers. But what is also important to highlight, as we speak about later-stage projects, even next-generation projects what we are working on that have larger commercial volumes immediately. So that could be in a positive sense lumpier. Those have -- it's harder work to bring these projects on the pipeline, but it's important to understand that, that customer segment exists. And thirdly, we introduced at with CMD that we have an undisclosed partnership discussion with biosimilars which are closer to the second bucket, meaning those are efforts with larger volumes and more clinical supply runs and development runs. And with that, I mean, we say at this moment of time, we have the trough now, but you can expect a smoother picture as crackers introduced. And with that, back to Werner.

James, I helped this answer your questions because otherwise we go to next question.

Next question is from the line of Derik de Bruin with Bank of America.

A couple here. I guess the first one, you're looking at your net debt ratio, your leverage ratio at 7.7x. How should we think about that and particularly given higher interest rates in the environment right now? And how should we sort of think about your interest expense and how that sort of trending in the next year? That's one. And I won't bombard on one since they're different. So let's do that one first.

Okay. First one goes to Enno.

Yes, sure. And so overall, I think you have seen that our net debt leverage, excluding IFRS 16, that was the number you were just referring to is currently at minus 7.7x negative. So a lot of headroom here, if you assume that normally, we clearly have the intention never to go beyond plus 3x factor as this is still the investment grade, so to say. So there's a lot of headroom here. Currently, I mean, that means we have a clearly positive cash position. We will continue to invest significantly. I mean we gave you some examples here. Today, CapEx -- for growth CapEx for Just J.POD in the U.S. and Toulouse, but also our equity portfolio. And despite having a positive operational cash flow that we have seen last year and even more this year due to the prepayment also of Just J.POD. We will probably see a decrease of our net cash position, and that would also mean that this net debt leverage would come closer to zero over time. That said, still being in a very comfortable zone and again, not really leveraging the balance sheet at this point in time, fully from a debt structure side, yes.

Great. And I can appreciate that Milestones are difficult to predict and such. But how should we think about, at least for -- Just moving beyond the fourth quarter into 2023 and just sort of thinking about this? Because there any way you can sort of give us a bracket of what is highly likely versus what is less likely? I'm just trying to get a sense of the milestone pacing going forward.

So overall, the portfolio of potential milestones has been increasing dramatically because we have more partnerships with a higher cascade of milestones and with typically also very well established projects to achieve these milestone events going forward. And just let me highlight, for example, our targeting protein degradation platform that has delivered a significant transaction with BMS starting this year has up to €5 billion in milestone potential behind it. And these are not all late-stage milestones. These also some of them very [indiscernible] term milestones or when you look at this third quarter, you see some smaller milestones coming in or Phase I entries speed optimization entries element. So the overall portfolio is increasing, but we are it would be just not right, is to predict to the outside world what we think is the level of achievement of them. So that's why the volatility through milestones will continue. I think also here, you see a lower number of milestones achieved, for example, this year, where the milestones have been not so strong so far, we expect this to change in Q4. But if you look at last year, then you see, for example, a number of milestones, which I would consider to be going forward, a somewhat normal number of milestones to be expected as a minimum. And then from there on, it should increase. And never forget, for example, this year, if our P2X3 would have come through, milestones and milestones levels would already look quite different.

Got it. And then just one final question. Can you just give us a little bit -- how many -- a little bit more color on just your early-stage biotech business? I mean how have your number of deals relationships change from '21 to '22? Has the number increased as -- but the revenues decreased, as the revenues increasing? Just some sort of flavor of this. I mean a number of your competitors have sort of noted delays elongated sales cycle. And just sort of want a little bit more color on just the flavor of what your biotech equations are?

Yes. Maybe also this is a question from a business development perspective, back to Matthias how we look at the segments here overall.

Yes. Maybe to give you a little bit of a picture. So to start with the last part, we have not seen a slowdown as Werner, I mean, introduced earlier. We see a sound/strong demand. That is likely because our customers see broadly Evotec as a part of the answer in an era where cost effect and efficient solutions are required. Maybe a little bit more specific in terms of customer segments, we have a balanced portfolio between biotech and big pharma. As a biotech, of course, the whole range from early in new course all the way to later serious stage biotech. We can only see in terms of order book that the demand is proportional what you see to the revenue growth that we have reported. So we have not seen a significant shift in the composition of our customer segments. That's all I can say at this moment of time. Thank you.

And -- maybe one number here, there is at every moment in time, we are working with more than 500 partners in the smaller biotech world together and that's also constituting a large portfolio of different stages of experiments, different stages of risk disposal, different stages of funding. And that's why here, there's a positive portfolio effect kicking in basically also throughout all the services that we are providing and that there's not a particular, for example, single service that would be exposed right now more than another one. And that's why, yes, we don't ignore the funding environment out there. Not at all. We have part of this world. But from how we can deal with it from our portfolio at this stage, we don't see a large problem.

Maybe to very briefly add also the accounting perspective to this. So for the year so far, we have not had any significant adjustments in our revenue recognition based on receivables not being paid. So this is clearly below 1%, and I hope we can maintain it that way.

Next question is from the line of Peter Welford with Jefferies.

Peter, we cannot hear you. Now we can hear you.

Yes. Sorry, I -- just a couple of questions there. Firstly, just -- sorry, going back to these milestones again. Can you give us some sort of idea of what proportion of those are related to Bristol and Myers? Should we be thinking that the majority of these are related to Bristol? Or is it actually a far more diverse customer base that we're waiting for milestones by the end of the year? Then just two, I guess, on Just - Biologics. One, just so I can understand with regards to the phasing of revenue recognition that you were talking about, I think you said sort of 9 to 18 months typically after a contract signed, we sort of see things tick up. But just so I get to understand, is the phasing here connected to you sort of doing the runs and then shipping to the customer? Or is it related more to the technical aspect of getting the customers product that they need into your facility actually sort of getting the reactor set up the process set up for the individual customer? And so it's more of the technical aspect of doing it? Or is it more, if you like, the actual production runs and just the said the sort of shipping and phasing of that? And [indiscernible], I think you said you're disclosing the second DOD award. I believe you said by the end of the year to give us an idea of what the magnitude of it is. Is that also true for the biosimilar contract? Or is that -- is that likely to be disclosed only, I guess, once we find out what happens with successful failure of that? -- that's great. Thank you. Sorry.

So on the third question, I will give an answer on the milestone question, also, I will give an answer on Just and revenue recognition, Craig will give an answer. So on the biosimilars transaction, we definitely will not take any pressure from anyone and will create as many options as we want and can our platform. So therefore, no time line for that. When we will close something or not, there's a little pilot running. But if this leads into a larger transaction, we'll see. But the DOD is already awarded, but it's not fully clear how the work packages are coming together. That's why the full sum is not clear, but it will be to try to give a guidance what we expect it will be somewhere in the range of the first package that we have already received, which was $49.9 million, could be a little less, could be a little more but that's always only the discovery and development phase that does not include the sales that would follow these contracts. So that's why this is quite significant. If you look at it over the time horizon here of two to five years. We have a very diverse partner group where there is a lot of exposure to milestones. This is coming to your first question. So let me just highlight that we have closed this year a large transaction with Lilly. We have closed a large transaction with Novo Nordisk. We have disclosed a very large partnership with BMS and target protein degradation. We have an ongoing very large partnership with BMS in neuroscience. So yes, there is a bias, a very strong bias towards BMS milestones when it comes to the significance of them because these are significant biological events. But the portfolio of where milestones are coming from and where they could come from is a very broad portfolio. I think it's more than 30 different companies where we have milestone and royalty exposure. But for Q4, there's clearly a bias towards BMS that you have to see. And -- and from both -- or actually, there are more than two transactions are going with BMS from all transactions with BMS that are ongoing. And to the Just question, I hand back to Craig.

Yes. Thanks, Peter. Yes, absolutely right. So the typical spread out of the revenue recognition might well be anything from 9 to 18 months, and that's the nature of the kind of integrated and holistic nature of the contracts that we're tending to sign. So it's not a delay on arrival of materials. It's not a delay on beginning the work. It's rather more that if someone comes and says competitive package to take starting project through to a particular phase like a preclinical or Phase I batch for example, then there will be numbers of stages of work. [Sale bank] sale expansion, process development, manufacturing run shipping and close. And those kind of things can take many months and they're sequential. And so revenue recognition as a percentage completion, and that's why it gets smoothed out over that period where the work is conducted. So I hope that gives you a clear answer as I can.

Next question is from the line of Steven Mah with Cowen.

Steve, we cannot hear you. Otherwise, please don't hesitate just to send us an e-mail or call us directly. There is no problem to answer any question also beyond this call.

We will move on yes -- we will move on with Joe Hedden with Rx Securities.

You recently highlighted the commercial launch of PanHunter. Just wondering if you could give us some more details on what types of customers that you can -- that you're targeting with the software that perhaps you weren't hitting before? And any kind of details around subscription costs? And what do you expect in terms of revenue contribution in the future when there's some traction?

Yes. So maybe with this also to bring Cord into the room because Cord is one of the masterminds behind PanHunter. First to give you a highlight of what PanHunter is and how we think that this will impact the industry.

Yes. So happy to answer this question. So first of all, PanHunter is a tool that really allows the comprehensive and combined analysis of Omics data and bringing into context with particular clinical data sets, but also preclinical pharmacology data sets. And so we believe that this is a tool as the megatrend of the for precision medicine approaches and more personalized medicine approaches in the industry continues to move forward, that this is a tool that the more Omics data is being used, the more these kind of tools will be required in the industry. And we feel that PanHunter is probably one of the most comprehensive tools that allows the analysis of these kind of huge data sets and with that, we believe that our customer will be not just in the pharma environment, where a lot of fund companies have their internal capabilities, but this is a tool to the [market], essentially the analysis, make it feasible for simple bench scientists to play and crunch the data with the data sets independent of a direct support of a [indiscernible] or a data scientist and -- so it's pharma we are targeting, but also in particular, biotech companies that may not have bioinformatics department set up to the extent that they can deal with these huge amounts of Omics data that is increasingly coming online through public domain sources, but also in-house generation of these kinds of data sets. The exact pricing model, et cetera, that depends on the extent of the use of the tool as well as the number of people expected to use it. Here, we have not disclosed any cost structures as of yet. But we are already working with a number of companies or collaborators already on the biotech sector, but also pharma sector that are accessing these tools and are basically accessing this tool and on prescription model essentially. So that's where we currently are with that. It's a tool that is -- will be built out in the future even further beyond where it is today, but it is a very excellent starting point. And once again, from as far as we are concerned on what we know about the field and they are scanning this very carefully, the most comprehensive tool available.

And let me just highlight that for the first half of 2023, we are planning to highlight our PanOmics focus area, and it is also PanHunter there, we will give much more detail after this first phase of, I would say, experimental launching of PanHunter and then also we make kind of the Capital Markets Day around PanOmics or a large part of that on PanOmics. So a lot of more handsets will come in the first half of '23 on that. We go to the next question, please.

Next question is from the line of Steven Mah with Cowen.

Great. Can you guys hear me?

Now much better.

Great. Appreciate it. Doing great. A lot of ground already covered. So I just have one question. I appreciate the color that you guys have said that the R&D projects, the pace of that is not slowing given the macro environment. But I had a question specifically on new partners that you're signing up, especially with maybe smaller [apex]. Has the macro environment impacted on the new partner deal structures that is -- are these smaller companies asking for less upfront payment and more back-end economics? Are there any trends or color you can share with us?

So maybe also to reiterate here for typically smaller [indiscernible] companies, there is no differentiation on payment structure, fee structures or [upfall] structures. Most of that is starting with very classic fee-for-service payments. And that's something that has no change in how we approach that market. And the other thing why we are growing so nicely is most of it is coming that we are going deeper in our relationships and not broader. So yes, it could very [wealthy] that we are not broadening out to more partners in the start-up biotech world at this stage. But with those who are well funded, we see a deepening of the relationships because they realize that working with Evotec as a flexible force versus building up fixed costs is increasing their chances of achieving next fundable milestones. So that's why I think where I would focus on from [indiscernible] point is are we going deeper with the right companies and not broader with those who are not funded or have problems to get funded at this stage. And that's maybe another were to be said and highlighted that where there's no funding in sight or whether it's no payment schedule to be achieved, we are, at this stage, very hesitant to start relationships because from an opportunity cost perspective, then we are using our capacities there where we have the best opportunity to optimize gross margin going forward and to achieve operational leverage. So that's the situation as of now with biotech funding. And as I said before, into '23, we see a very strong growth already but if biotech funding remains throughout the whole 23 into '24, then this will potentially also impact us. And then we would basically look at should we slow down the growth of our capacities. But that -- that's the definition of what we are talking about here, nothing else.

Your next question is from the line of Falko Friedrichs of Deutsche Bank.

Two questions, please. Firstly, thanks for providing this indication that double-digit sales growth could be doable in 2023. Is it possible that you also give us some kind of early flavor on potential earnings growth next year? So as I'm looking at consensus, it assumes about 40% growth on adjusted EBITDA value close to €150 million. Are you able to at least give us an indication of whether that is in the parts or not next year? And then my second question is on your BMS partnerships. Can you share if there are any significant milestone events or scientific events in general next year that we can be excited about?

So maybe the second question on BMS goes back to Cord again to give you a bit of a flavor on neurodegeneration and target import in neurodegeneration especially. And when it comes to '23 top line growth, double-digit. I think we are very confident on that. And I think what's very clear to us also is that operational leverage when it comes to the bottom line has to be improved and it has to be significantly improved. And that's what we're working on, and that's why we are very confident into '23 that EBITDA levels will be much stronger than what you're seeing right now. Because you should never forget our EBITDA levels at this stage are impacted by the start-up sales of Just - Evotec Biologics are impacted by energy costs and are impacted by a delay in adoption of prices that we are able to make into our partnering world and partners world, where we don't see a hesitation except higher prices, but where it just takes time to get this through to higher milestones, through better controlled costs and also better planning of costs, like, for example, we will do this with energy and other things, we expect significant better operational leverage on EBITDA going forward.

So this is Cord speaking. So in regards to potential milestone payments. So the pipeline of upside bearing milestone bearing royalty-bearing projects is continuously growing in our pipeline and will continue to grow. Going forward, we do expect -- this is also true for the pipeline that we -- or the pipelines that they're pursuing together with BMS. And in this pipeline, there are I would say, a number of potentially smaller wins but events, but there are also a couple of potential bigger events that are a very solid double-digit million milestone payments that we expect. And once again, the exact timing of these miles is never quite clear, but we are quite optimistic that there are a number of very significant milestone bearing events in 2023.

And maybe just to highlight one, there is chemical projects on [indiscernible] in BMS coming out of our new collaboration, where we will see clinical progress in clinical data, some, for example, iPSC-derived neurodegenetive project early 2023, and that's, of course, significant. And that's not only financially significant, but that's from a validation of the platforms and from a prediction quality of the platforms, very, very exciting.

A quick follow-up. [indiscernible], if I can try to tease you a little bit more on the EBITDA for next year. So -- so just the market expectations around €150 million, is that something you would at this point already say, well, that is definitely a bit too optimistic, most likely or if there is at least in the [indiscernible] in your very early thinking about the next year?

I mean we are in budget making process. We are preparing for all of that. When you would want to have an exact number of €150 million, I would say, that stretched number. I -- from today's perspective, I think it's just too high. Having said that, it will be very much dependent on achievement of milestones and other things. And most importantly, will depend on the pickup of Just - Evotec Biologics into 2023. So I would probably not make my model as deep as this indicates, but I would operate the long-term perspective of the model and the quality of the model into the long term. That's as much as I can give away.

Final question is from the line of Victoria English with Evernow Publishing Limited.

Yes, Werner. On the subject of milestones, not to belabor the subject too much -- but to what extent is this decline in milestone payments as a result of the shuttering or the cancellation of programs by your client companies? That's the first question. And then iPSCs, I'm struggling a little bit to see the trajectory of your plans for iPSCs. Do you see yourself being a significant or a manufacturer of these cells?

So thank you so much, [indiscernible], long time here. Maybe we go on the second question to Cord on the, so to say, short-term vision and longer-term vision of iPSCs but on the volatility of milestones, there's nothing that comes from cancellations, really nothing if there are milestones that you currently don't see in our EBITDA or on our top line, then it's basically biology or safety effects that have just not come through. Let me head again here that P2X3 would have been associated to significant milestones this year, which definitely will not come in 2022 and also not in '23. And there were other milestone effects, which were biology driven, but it's nothing that came to cancellations.

And this is Cord speaking in regards to cell therapy, iPSC-based cell therapy manufacturing. So generally, we are all aware of the fact that autologous CAR-T based cell therapies have been tremendously successful in treating cancer patients, in particular. Also, I think, aware of the fact that in many other indications, cell therapies seem to be the modality of choice in order to develop disease-modifying therapies. And here, in both areas, iPSC-based cell therapy approaches are, in many ways, believed to be superior to autologous cell therapies because you can expand them essentially indefinitely and scale manufacturing here to potentially wider markets also than with a different cost base essentially. The -- our most advanced project is the diabetes project, which is currently moving towards the clinic. And here, we are -- you have to essentially bring a process that was established essentially as a research protocol has to move then into GMP manufacturing with all the associated requirements in terms of GMP compliance cell lines, et cetera, [PP] and have a gene [P-compliant] manufacturing facilities. And so we fully intend to become one of the key manufacturers in the space of iPSC-based cell therapies. We believe they are -- currently, there are only very few players in the market space who can actually do this at all work actually prepare sufficient material for clinical trials even -- and so we see this as a huge opportunity going forward to essentially seamlessly translate our iPSC platform, which is extremely broad and effective in the duct discovery space and also leverage that into the cell therapy space.

With this, let me reiterate my offer. If you have any further questions, please don't hesitate to reach out either to Volker or to me directly, and we are happy to answer questions. Otherwise, thanks for following Evotec.

Thank you so much for understanding where we are with the Company and guiding us into the next years together with your analysis and your view of the Company. With this, I wish you a great day, and hope to see you also. All the best.