Evotec Announces Financial Results for 2007
Financial results for the year were driven by strong progress in theCompany's clinical pipeline and four major corporate transactions, theacquisition of Neuro3d, the sale of Evotec Technologies (ET), the sale of theChemical Development Business (CPD) and the proposed acquisition of Renovis.Including the now discontinued activities, the company achieved revenues ofEUR 54.4m (2006: EUR 84.7m) and a net loss of EUR 11.2m (2006: EUR 27.7m).While 2006 included both, ET and CPD for the full year, in 2007, ET was notincluded anymore and CPD only for eleven months.
In light of the Company's recent divestments, the remainder of thisrelease focuses on the financials of the continuing business of Evotec(referred to as the 'continuing business'). In its continuing business theCompany achieved revenues of EUR 32.9m and had total cash and investments ofEUR 93.7m respectively, meeting its guidance for 2007 of EUR 30-35m ofrevenues and EUR 93-98m of cash.
Evotec Group revenues from the continuing business in 2007 were EUR32.9m. The decrease of 19% compared to the previous year (2006: EUR 40.6m)resulted mainly from three effects:
1. Almost half of the effect was due to the delay in receipt of milestonepayments, which are now expected to be received in 2008.
2. Library synthesis revenues declined by EUR 5.7 m (86%) following thesuccessful completion of the multi-year collaboration with Merck & Co. at theend of 2006 and the transfer of this business into the joint venture withRSIL in October 2007.
3. Further pressure came from adverse exchange rates.
Adjusting for these factors, revenues of the ongoing business would havegrown by 9%.
In 2007, net loss of the continuing business increased to EUR 48.1m(2006: EUR 29.0m) and the operating loss amounted to EUR 58.1m (2006: EUR34.5m), resulting mainly from the Company's increased investments in researchand development programs as well as lower gross profit and impairment. TotalR&D expenses increased by 22% to EUR 37.0m (2006: EUR 30.3m), due primarilyto the sizable clinical development programs for EVT 201, EVT 302 and the EVT100 family. SG&A costs increased to EUR 17.8m (2006: EUR 15.0m) mainly as aresult of the costs related to corporate transactions as well as increasedinvestment in Business Development and licensing resources.
Evotec reported higher amortization and impairment in 2007 mainly as aconsequence of focusing its operations increasingly on proprietary research.In total, impairment charges and regular amortization amounted to EUR 11.1min 2007, compared to EUR 2.7m in 2006. This increase primarily results froman impairment charge of EUR 5.8m against the carrying value of the goodwillattributable to the Oxford-based laboratory operations, plus a furtherimpairment charge of EUR 3.2m related to earlier discovery projects acquiredwith Evotec Neurosciences that have been discontinued for strategicprioritization reasons.
On December 31, 2007 Evotec held cash and investments of EUR 93.7mcompared to EUR 78.7m at the end of 2006.
"The last year has seen great change at Evotec. We implemented ourtransformation to a drug development company and thereby, enhanced theCompany's potential value creation for our shareholders. In addition, ourpipeline is maturing. Two Phase II compounds are being readied for partneringwhile another compound, close to Phase II, will soon enter trials designed toproduce key proof-of-concept data. Finally, several advanced preclinicalprograms are approaching the clinic. Through the recent divestments ofnon-core businesses we have increased our liquidity to EUR94m which is a verysolid position to further develop our pipeline," said Jorn Aldag, Presid
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