Evotec OAI AG Annual Report 2004 'Taking the Lead'
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Evotec OAI AG Annual Report 2004 ‘taking the lead’ Segment overview Evotec OAI operates through three Discovery Programs business divisions: Division (DPD) > Discovery Programs Division: Evotec OAI’s Discovery Programs Division proprietary drug candidates (DPD) is developing a deep portfolio of > Discovery and Development proprietary drug candidates. With years Services: contract research and of experience in assay development, development screening, chemistry and optimisation, > Tools and Technologies|Evotec Evotec OAI has established a strong Technologies: technologies and track record of successfully identifying instruments such candidates for its customers. In its proprietary research DPD has built up extensive knowledge about diseas- es of the central nervous system (CNS) through Evotec Neurosciences (ENS) and about metabolic disorders through the joint venture with DeveloGen. Through the acquisition of full ownership interest in ENS in March 2005, the Com- pany has now established its own attrac- tive CNS pipeline. DPD plans to rapidly progress the current programmes, to ex- pand these activities and to engage in early partnerships and|or out-license the drugs at proof-of-concept to the pharma- ceutical industry which is continuously searching for novel drug candidates to fill their clinical development pipelines. Discovery and Development Tools and Technologies Services (DDS) (Evotec Technologies|ET) Evotec OAI’s Discovery and Development Evotec Technologies (ET) is developing Services (DDS) division provides drug innovative drug discovery technolo- discovery contract research and develop- gies and instruments for the pharmaceu- ment support to a large group of global tical and biotechnology industries customers and to Evotec OAI’s internal and academic research institutions. The research in the Discovery Programs Company provides cutting-edge solu- Division. DDS’ state-of-the-art industrial tions for miniaturisation, automation and scale engine attracts both biotech cus- measurement by seamlessly inte- tomers who lack expertise in a number grating hardware, software and bioware of elements in the drug discovery proc- modules. ET’s product portfolio includes esses as well as big pharmaceutical part- optical detectors for single cells and ners who wish to enhance their R&D molecules, automated liquid handling productivity. The DDS division has evolved devices, automation systems, data as one of the fastest growing solution handling and interpretation as well as providers from target to clinic through micro plates, chips and assays. The its unmatched range of integrated ca- adoption of ET’s products worldwide pabilities, a strong track record in deliver- and its biological competence pro- ing results and an outstanding customer vides ET a significant competitive ad- network. vantage in the industry. Evotec OAI overview Content Condensed key figures Evotec OAI AG 02 Highlights 2004 Page 2003 2004 ∆ 04|03 in % 04 To our shareholders Results 06 Our strategy Revenue 36 T 77,228 72,730 (5.8) R&D expenses 38 T 15,466 13,772 (11.0) Building pharmaceutical pipelines 1) 12 Segment reports Operating loss 38 T 5,106 11,759 130.3 Linking strengths Net loss 39 T 14,242 84,203 491.2 28 R&D report EBITDA 39 T 4,086 (3,246) (179.4) Shifting the portfolio Cash flow 40 T (1,333) (3,624) (171.9) 35 Status report and outlook Our performance 2004 Balance sheet data 46 Evotec OAI shares Stockholders’ equity 41 T 172,101 102,010 (40.7) 2) 50 Corporate Governance Capital expenditure 40 T 14,204 1,646 (88.4) 53 Consolidated financial statements Cash including 78 Report of the Supervisory Board marketable securities 40 T 19,471 15,277 (21.5) 80 Supervisory Board and Management Board Balance sheet total 41 T 220,919 138,534 (37.3) 82 Financial calendar and imprint Personnel data Key figures Employees as of 31|12 42 644 646 0.3 Evotec OAI worldwide Glossary Per share Result 47 (0.40) (2.30) (475.0) ) 1 Before amortisation and impairment ) 2 Purchase of fixed and intangible assets, excluding capital leases Segment overview > v = value Pharmaceutical companies create value by delivering medicines to patients. To bring new drugs to market, they are increasingly complement- ing their internal research from outside sources. The pharmaceutical industry seeks strong partners who can deliver a continuous stream of high value drug candidates to fuel new products into their clinical development pipeline. t = target Biotech companies and leading academic institutions have validated a vast number of important biological disease targets providing tremen- dous opportunities to identify innovative drugs and improve healthcare globally. Many of these targets lie idle in a bottleneck caused by limited chemistry discovery resources and funding. Unlocking their value is a major challenge of this decade. i = integration Evotec OAI unlocks the assets of biotech companies and academia with its fully inte- grated industrial discovery engine that both validates their targets and provides novel, intermediary drug candidates that are in demand by the pharmaceutical companies. Evotec OAI’s goal is to be a Value through integration leading provider of high quality drug candidates to the Pharmaceutical research and development is a highly pharmaceutical and biotech complex and integrated endeavour that creates new industry. medicines for unmet medical needs. Successful results depend upon the quality and intelligent integration of the many individual steps within the discovery part of the process. At Evotec OAI we take pride in delivering the highest industry standards in many of the essential chemical and biological research skills, concentrating our efforts on integrating these skills to help deliver high quality drug candidates to the pharmaceutical and biotech industry. 02|Highlights 04|Letter to shareholders 06|Strategy Management report: 12|Segment reports 28|R&D report 35|Status report Highlights 2004 Evotec OAI is successfully collabo- rating with numerous pharmaceutical and biotechnology companies worldwide. Selected new contracts and highlights of 2004 are illustrated on the following two pages. Noted collabo- February March rations include a new strategic part- nership with Boehringer Ingelheim, an > Evotec OAI and Toray sign > Evotec Neurosciences to integrated medicinal licence NMDA receptor NR2B expanded discovery chemistry con- chemistry, virtual screening subunit selective antagonists and compound profiling from Roche tract with Roche, the rapid progress in agreement > Evotec OAI and Panacos Metabolic Disease drug discovery with enter into medicinal chemistry agreement to design DeveloGen and the successful develop- and optimise novel anti-HIV compounds ment of Evotec Neurosciences. > Evotec Neurosciences com- pletes € 25 million Series A financing August September > Seikagaku selects Evotec OAI > Evotec Neurosciences and as assay development Evotec OAI enter into joint and screening partner drug discovery collaboration > Second Metabolic Disease with Boehringer Ingelheim compound advanced to identify GPCR modulator- into lead optimisation in based new medicines DeveloGen joint venture > Evotec Technologies and QIAGEN demonstrate significant benefits of com- bining high-content cellular imaging systems with RNAi applications 46|Shares 50|Corporate Governance 53|Consolidated financial statements 78|Report of the Supervisory Board 02|03 April May June July > Evotec OAI increases shares in > Evotec OAI and Roche enter > NeuroNova selects > Evotec OAI successfully parenteral formulation into strategic global discovery Evotec OAI as their assay increased its share capital subsidiary ProPharma to 81% chemistry agreement development and > Biogen Idec selects > Evotec OAI enters into > Guilford Pharmaceuticals screening partner Evotec OAI as a service integrated virtual screening selects Evotec OAI as > Evotec OAI undergoes provider for process and medicinal chemistry their assay development and successful FDA inspection research & development agreement with Fujisawa screening partner > Morphochem selects > Evotec OAI to expand agree- > Evotec OAI enters into discov- Evotec OAI as a partner for the ment with Oxford Bioscience ery agreement with Nuvios chemical and pharmaceutical Partners through integration development of its dual action of its new rational drug design antibiotic Oxaquin® platform, EVOrationale™ > Evotec OAI to apply new rational drug design platform, EVOrationale™, to high priority research programme from ActivBiotics October December > ALTANA Pharma selects > Evotec Technologies provides Evotec OAI as partner for a EVOscreen® and Opera™ to kinase lead identification Korea programme 02|Highlights 04|Letter to shareholders 06|Strategy Management report: 12|Segment reports 28|R&D report 35|Status report To our shareholders 2004 was a difficult year for Evotec OAI in terms of top and bottom line performance. Our contract research (Discovery and Development Services, DDS) and technology (Evotec Technol- ogies, ET) groups are still considered the best in the industry; however, in a stagnant pharmaceutical outsourcing market aggravated by the weak U.S.-Dollar, consistent growth as a pure service company is a challenge. With that said, we are optimistic about the future prospects for Evotec OAI. 2005 will be a critical year in the development of our company and we have successfully taken a number of measures necessary to keep Evotec OAI on a continued growth track: Increased emphasis on proprietary Joern Aldag President and Chief Executive Officer drug