Evotec Stock

Ladies and gentlemen, welcome to the Evotec Preliminary Second Quarter and First Half 2026 Results and Update Full Year 2026 Outlook. I'm Moritz, your Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Sarah Fakih, Head of Global Communications and Investor Relations. Please go ahead.

Thank you, Moritz. Good morning, good afternoon, and welcome to today's webcast and conference call. My name is Sarah Fakih, and I'm the Head of Global Communications and Investor Relations at Evotec. Please allow me to introduce today's speakers. Joining me on the call are Christian Wojczewski, Chief Executive Officer of Evotec; and Claire Hinshelwood, our Chief Financial Officer.

Please note that this call is being webcast live and will be archived in the events calendar on our website.

Before we begin, a few forward-looking statements. The discussion and responses to your questions on this call reflect management's views as of today, Tuesday, July 14, 2026. During this call, we will make statements and provide responses that state our intentions, beliefs, expectations or projections regarding the future. These statements constitute forward-looking statements within the meaning of applicable securities laws. They are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied. Evotec disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. For further information regarding these risks and uncertainties, please refer to our public filings and disclosures.

With this, let me hand over the call to Christian.

Thank you, Sarah. Good morning, and good afternoon to everyone. Thank you for joining today's call. Following our announcement last night, we are providing today an update based on preliminary unaudited financial results for the second quarter and first half of 2026 as well as an updated outlook for the full year.

As a reminder, publication of our full financial results is scheduled for August 13. During our full-year 2025 results presentation in April, we guided for a challenging first half of 2026. This outlook primarily reflected our anticipated continuation of the softness in the discovery -- early drug discovery market seen in 2025 as well as the effect of the nonrecurrence of the $25 million Sandoz licensing payment in the first quarter of the previous year.

Our preliminary second quarter results extend the trends we saw in the first quarter. Group revenues in the first half of '26 are expected to amount to EUR 300.1 million, while adjusted group EBITDA is expected to land at minus EUR 42.7 million compared with the first half of 2025.

Our expectation in April for a stronger second half of 2026 was based on 2 assumptions: a gradual recovery in market activity and increasing contributions from strategic partnership activities. Based on our current visibility for the second half, we're now revising the assumptions on strategic partnerships, and as a result, updating our full-year guidance. The key drivers behind this revision are summarized on the right-hand side of the slide and can be grouped into 3 categories.

The first category relates to phasing and milestone-related revenues from existing strategic partnerships across both segments. These account for approximately 40% of the revenue difference between our original and updated outlook. Importantly, these revenues are delayed, not lost and are expected to be recognized in '27 rather than '26.

The second category relates to potential new strategic partnerships in our D&PD segment. We now expect lower-than-anticipated revenue contributions in the second half of '26, as a result of longer timelines for reaching and finalizing new agreements. This category accounts for approximately 45% of the revenue difference. Importantly, our underlying partnership pipeline remains healthy and active with multiple opportunities at various stages of engagement, including advanced discussions with potential big pharma partners.

While we are highly confident about establishing new partnerships, any agreements reached this year are unlikely to contribute meaningfully to revenue in '26. In addition, the timing and structures of individual deals may influence the balance of upfront cash payments, revenue-generating activities and milestone contributions in '27 and beyond.

The third category relates to sales to revenue conversion. Although commercial activity and customer engagement have clearly improved, conversion into revenue has occurred more slowly than anticipated. While a small portion of revenue conversion is expected to shift into '27, approximately 15% of the revenue difference is attributable to lower-than-expected revenue conversion in '26 relative to our previous guidance. This portion relates to an acceleration objective we had set for ourselves, but which has not materialized to the extent originally assumed.

As a result of these factors, we are updating our full-year '26 guidance, and Claire will speak about this in more detail later. While this revision is clearly disappointing, it is important to emphasize that it is primarily driven by the timing of partnership planning activities and ongoing partnership milestone revenues rather than any fundamental change in these opportunities. The number and value of partnerships we are pursuing has not changed substantially. However, the conversion of these opportunities will take longer than expected.

At the same time, leading commercial indicators in the first half of '26 document encouraging increased activity across our base D&PD business, including strengthening customer engagement and growing net sales. We're confirming the positive momentum highlighted over recent quarters and expect those to pay off from late '26 onwards. In addition, any recovery in the discovery and early development market would provide a further tailwind to growth.

I will return to these indicators later in the presentation and discuss them in more detail. But first, I would like to turn things over to Claire for a review of the preliminary and unaudited Q2 and first half '26 numbers.

Thank you, Christian, and good morning and good afternoon to everyone. On Slide 5, let me give you an overview of our preliminary and unaudited condensed income statement. Group revenues for the second quarter of 2026 are expected to decrease by approximately 16% to EUR 143.5 million and for the first half of 2026 to decrease by 19% to EUR 300.1 million compared to the same period in 2025.

In D&PD, revenues are expected to decline by approximately 15% to EUR 108.1 million in the second quarter and by 16% to EUR 227.9 million for the first 6 months compared to the prior period.

Within JEB, revenues for the second quarter of 2026 are expected to decrease by 17% to EUR 35.4 million. And in the first half, we anticipate a decrease by 29% to EUR 72.3 million compared to the same period in 2025. Unfavorable foreign exchange movements are expected to represent an additional headwind to half 1 revenues of EUR 13 million, driven by the U.S. dollar and the British pound. Adjusted group EBITDA is expected to amount to minus EUR 20.8 million in the second quarter and to minus EUR 42.7 million in the first 6 months of 2026 compared to the same period in 2025.

Turning to liquidity and the balance sheet on Slide 6. The total liquidity as of June 30, 2026, stood at EUR 465.6 million, representing a quarterly increase of EUR 20.8 million compared with EUR 444.8 million at the end of the first quarter '26. The quarter-over-quarter increase was primarily driven by the gross proceeds we received of approximately $100 million related to Gilead's acquisition of our EVOequity portfolio company, Tubulis, as well as from our recent EUR 116 million convertible bond placement.

First half liquidity further reflects the scheduled debt repayment of approximately EUR 65.8 million, in line with our liability maturity profile. This planned repayment reduced liquidity during the period while contributing to a lower debt position. This liquidity position, combined with savings being realized from our successful implementation of the Horizon transformation positions Evotec to absorb impacts such as the volatility in our strategic partnerships outlook that Christian has described earlier.

With that, I'll hand back to Christian, who will discuss the progress we're making in our commercial activities and in accelerating revenue conversion across the various components of our business.

Thank you, Claire. Before discussing the conversion dynamics we're currently seeing in the business, let us take a step back and look at the 3 principal creators of revenue streams within our D&PD segment and their respective conversion cycles shown on Slide 7. In our stand-alone business, engagements are typically focused on specific scientific services with straightforward commercial agreements and short delivery timelines. As a result, the sales cycle is fast, and the period from order intake to revenue recognition generally short, often around 3 to 6 months.

In the second type of relationship, integrated programs, customers engage Evotec across multiple capabilities within a broader research program. These engagements involve more complex contracting, longer delivery periods and a wider scope of work. Consequently, revenue conversion typically occurs over a period of approximately 9 to 24 months.

The third category is strategic partnerships, which represent the most comprehensive and complex form of engagement. These partnerships are individually structured, often involve extensive negotiation and governance frameworks and frequently include a combination of research services, milestone opportunities and long-term collaboration elements. As a result, the time from initial commercial engagement to meaningful revenue contribution can range from approximately 12 to 24 months. Although revenue conversion takes longer in the context of strategic partnerships, these relationships create the potential for substantial long-term value, as they typically generate revenue streams over multiple years and can expand significantly over time as programs progress.

Generally, as you move across these 3 creators of revenue streams, both the complexity and the time to revenue conversion increase. Looking at our sales to revenue conversion dynamics we're experiencing in '26, we entered the year expecting improvements in commercial activity to translate into stronger revenue growth as the year progressed. As discussed earlier, approximately 15% of the difference to our previous revenue guidance relates to a conversion ambition that is no longer expected to materialize within '26, also reflecting a more gradual pace of business expansion while the organization remains focused on executing the Horizon transformation and building the foundation for sustainable long-term growth.

At the same time, in the base business, including stand-alone and integrated programs, we have seen encouraging developments in key leading indicators from customer engagement and proposal activities all the way through net sales. During the first half of the year, inbound inquiries increased by approximately 30%. Number of proposals increased by more than 45%.

In our stand-alone business, where both sales and revenue conversion cycles are relatively short, we are seeing these positive developments across virtually all leading indicators. Customer engagement has increased, proposal activity is growing. Orders and net sales are up substantially during the first half of the year. Revenue, however, has not yet started to reflect this momentum.

Given the relatively short conversion cycle of approximately 3 to 6 months, we believe this is largely a question of timing and expect these trends to translate into revenues over the coming quarters. In our integrated program business, we see a similar pattern at the front end of the commercial funnel. Customer engagement remains strong and proposal activity continues to grow. However, due to the greater complexity of these programs, orders and revenues naturally lag the trends we are seeing in customer demand.

The same principle applies even more strongly in strategic partnerships. The highly customized nature of these arrangements mean that proposal activity, orders and revenues naturally develop on a longer timeline. Taken together, these indicators provide encouraging evidence that underlying customer demand and commercial activity are strengthening across all 3 revenue streams. The challenge we face in '26 is one of conversion timing.

As commercial complexity increases, the time required for this activity to translate into revenue increases as well. That said, in the first half of '26, we were already able to shorten the average sales cycle by more than 15% to start moving opportunities through the pipeline more efficiently and supporting faster customer decision-making. The commercial indicators give us confidence that the underlying trajectory of the D&PD business is moving in the right direction and that there is improved customer engagement and strengthening demand from our services.

On Slide 8, let us take a look on the underlying base business of our Discovery and Preclinical Development segment, including stand-alone services and integrated programs, excluding large strategic partnerships to provide a clearer view of the business. We saw strong improvement throughout the first half of the year. Net sales increased approximately 28% for the first half compared with the first half of '25. This figure reflects both positive and negative change orders given a realistic -- giving a realistic picture of customer demand and project activity.

As these activities cycle on a shorter frequency compared with strategic partnerships, it is expected that we will begin to see the results of increased activity in these areas by late this year. Additionally, proposal value in the first half of '26 increased by more than 20%, indicating a growing number of attractive value opportunities going forward.

Similarly, we are seeing steady positive development of our Just-Evotec Biologics segment as organizations ranging in size from small biotechs to global biopharma companies continue to show strong interest in our innovative continuous bioprocessing offerings. Just-Evotec Biologics continues to refine its business model to maximize the benefit that customers can accrue from a continuous manufacturing approach in terms of cost, flexibility and speed of infrastructure development.

At its base, the CDMO services business is at high capacity, extending its customer base as well as its range of offerings. With the official introduction of the J.TRAIN offering in June, customers have the potential to deploy a proprietary continuous manufacturing technology directly within their own facilities on a turnkey basis. J.TRAIN is designed to enable significantly faster and more cost-effective deployment than traditional manufacturing expansion, strongly supporting Evotec's mission of accelerating the path to market for the industry's most innovative products.

As a key example of this principle, our licensing agreement with Sandoz is progressing well in the wake of the transfer of our Toulouse manufacturing plant to Sandoz ownership last year. The relationship includes development revenues, success-based milestones and royalties for Evotec on biosimilar products in technical and early-stage development.

Shown on Slide 10 and underlying Evotec's progress toward sustainable growth and profitability is the Horizon phase of our strategic transformation. Horizon was announced in March '26 and continues to progress as planned. As a result, we expect total run rate cost savings of about EUR 75 million by the end of '27, with 20% to 30% of that amount expected to be realized in '26.

As announced in March, we expect the savings accrued by Horizon to start becoming apparent in the second half of this year. These cost savings, combined with the enhancements in commercial execution I discussed earlier, provide a strong foundation upon which we can erect some of the remaining elements of our strategy, including the establishment of high-value strategic partnerships.

Let me now hand over back to Claire.

Thank you. On Slide 11, I would like to take you through the building blocks of our revised revenue outlook for the remainder of 2026. For the full-year 2026, we now guide for group revenues of approximately EUR 570 million to EUR 610 million at incurred foreign exchange rates and EUR 595 million to EUR 635 million at constant exchange rates. Adjusted group EBITDA is expected to fall within the range of approximately minus EUR 70 million to minus EUR 105 million at incurred foreign exchange rates and minus EUR 60 million to minus EUR 90 million at constant exchange rates.

As Christian has said, while we see an improvement in our commercial indicators and expect to be able to close strategic partnerships before the end of the year, both will contribute only marginally to revenue this year.

Let me take you through the various movements that we see to help bridge the gap on revenue guidance. When we look at our base D&PD business, we see a decline versus original expectations. This is driven by the delayed effect of existing strategic deals as well as the conversion impacts that Christian earlier described, which are driven by the construct of our sales portfolio as well as the delay in the achievement of our aspirational target that we had set ourselves.

Of this decline versus guidance, we would expect around 65% of this to move into 2027, with the only net reduction being the delay in achieving the aspirational conversion target. So overall, no lost business. If we move to the second bar, this is a significant bucket that we have previously discussed related to the expected new strategic partnerships. As we have previously outlined, the time to secure these deals is extremely long given their nature and can be influenced by a number of external factors beyond our control within the potential partners' operating environment.

We have seen in recent weeks, timelines stretch beyond what was previously anticipated, meaning that any associated revenue recognition will be minimal this year. We are, however, confident in the quality of our pipeline and the current status of discussions, and as such, would see this bucket being delivered beyond 2026 with the final revenue impact being driven by the individual construct of each deal.

Moving on to JEB. Here, we see the base JEB business continuing in line with previous guidance, reiterating the confidence in our technology offering. JEB's strategic partnerships are slightly delayed versus original guidance. But here again, we would see that moving into 2027. As we are aware, it's not unusual for milestones to slightly shift, which can then result in a knock-on impact over the year-end revenue cut-off point.

In terms of EBITDA impact, we see a high proportion of the revenue reduction flowing through to EBITDA due to our high fixed cost base. But where we have had the opportunity to impact our costs with an impact already in 2026, this has been reflected in the outlook.

Let me now hand back over to Christian.

Thanks, Claire. Let me turn now from our strategy to the team that will deliver it and how strongly it has evolved over the past few months to bolster our commercial conversion, strengthen execution discipline and continue to drive operational excellence across the company. Over the past several months, we have significantly enhanced our management, governance and leadership team to support the next phase of Evotec's transformation. You've been introduced to all of these newcomers as they have joined.

On Slide 12, we would like to briefly highlight the key appointments and the talented people we have selected to fill them. In April, we were joined by Ashiq Khan as EVP Global Head, Chief Commercial Officer. Since joining, Ashiq has made a strong contribution to building the accelerated business activity and enhancing our commercial engagement with customers I described earlier. He's working closely with our new Chief Operating Officer, Ingrid Muller, who joined in May this year and who brings more than 20 years of life science leadership experience across operations, strategy, supply, procurement and R&D integration. During the second quarter, we also welcomed our CFO, Claire Hinshelwood. Claire brings a strong track record of reshaping corporate financial operations and making progress against the backdrop of challenging market conditions.

Turning to the Supervisory Board. We have a new Chairman, Dieter Weinand, who officially assumed his position in conjunction with our Annual General Meeting on June 11 this year, along with new Supervisory Board member, Wolfgang Hofmann. Together, they bring a wealth of international leadership experience spanning the pharmaceutical, biotechnology and health care sectors. Their deep expertise in commercial execution, innovation, capital markets and transformation will provide valuable guidance and fresh perspectives as we continue to execute Horizon and to sharpen our focus on execution, strategic partnerships and profitability.

Before we move on to Q&A, I would like to summarize where Evotec is today and chart our course towards the sustainable growth and profitability we intend to realize over the next years. As we have said before, we expected a challenging first half of '26, and the second quarter and first half preliminary results we have just presented aligned with that expectation.

Looking to the second half of the year, our expectations for revenue from strategic partnerships, in particular, the part of our business that is most complex and time-consuming to develop have shifted recently and have led us to revise our full-year '26 outlook. While the new outlook is not as robust as we had hoped, as I mentioned earlier, we do see positive leading indicators in the longer term in spite of a difficult market, especially in the parts of our base CRO business outside strategic partnerships.

With net sales up 28% year-over-year in the first half, we expect to see revenue from this increased activity beginning in the final quarter of the year. Combined with cost savings from the Horizon transformation that will begin to become apparent later this year and will grow by the end of '27 to EUR 75 million in annual run rate savings, we expect that the combination of high-value scientific offerings, improved commercial execution and disciplined financial management will keep us on track to meet our longer-term goals.

To that end, in the last several months, we have created a number of new roles and filled them with experienced and accomplished individuals who will continue to drive Evotec forward. Evotec today is in the later stages of a strategic transformation that has taken multiple years to implement.

There is still a lot more to do, but I strongly believe we now have the correct mix of focused scientific excellence, streamlined operations and strong commercial infrastructure to attract, secure and execute on a robust and diverse stream of business across our D&PD and Just-Evotec Biologics segment.

Thank you, and I welcome your questions.

[Operator Instructions] And the first question comes from Brendan Smith from TD Cowen.

Maybe just 2 quick ones for me. I guess, first, from where things stand today, I guess, do you have a goal for kind of the ratio or balance between JEB revenues and D&PD just over the next couple of years? Just trying to understand how we should think about kind of the growth of both segments relative to each other over the medium term.

And then separately, I appreciate all the color on kind of the recent updates on the partnership pipeline, and I know you mentioned no new partnerships are now expected to contribute in the second half, but you said timing and deal structure should be more of a driver next year. So I guess, can you just speak a bit more to kind of the health of the partner portfolio? Maybe what gives you confidence that '27 will be better? And I guess, if there's anything just about the nature of the current funnel, whether it's the type of assets or partners that you expect could actually inflect next year specifically or if it's just kind of a timing consideration?

Thank you, Brend. On the first question, we don't have a fixed ratio for JEB and D&PD for the long run. I think it's fair to say that we see growth opportunities in both segments. Also fair to say that over the last 2, 3 years, the growth was clearly more on the JEB side. We expect this to actually, going forward in the long run, grow a bit faster than the D&PD segment, but there is no fixed ratio.

On the health of the partner pipeline, yes, I can give you a bit of a flavor of that because we obviously have been in discussions with quite a healthy number of partners since quite a while. So the way that you should look about the strategic partner pipeline is in terms of numbers, we're somewhere between 10 to 20 opportunities here, single opportunities, where we have individual, either pharma or biotech companies, usually big pharma on specific topics. So this could be, for example, in the field of obesity, it can be in women's health. It can be quite a few actually in kidney and renal diseases. So it's across the larger therapeutic areas, and they all are based on our technology platforms.

So for example, our capabilities in molecular glues, our capabilities in cell therapy, iPSC, Omics and so forth. When you think about where they are in the life cycle, I would say roughly, roughly maybe 15% are in a very late stage, where we would still expect them to close towards the end of the year. And that's important, right? While they may close, they will not have a material impact on revenues. Hence, we talk here today. Then, there's a large chunk, roughly 60%, probably 60% that is in the early to late-stage term sheet discussions. So this is also pretty real conversations. And then, we've got the remainder, 25% or so, in early discussions or in due diligence phase. This is how you should think about the funnel.

Then the next question comes from Christian Ehmann from Berenberg.

I would like to linger a little bit more on the existing partnerships. Obviously, I'm trying to ask about the current state of the partnership with BMS. It was very successful in the past. And maybe you can give us more detail on how this might look. What's going to look in the future?

In addition, if I look at the numbers correctly, it looks like a little bit that JEB is actually slowing down in growth. Maybe you can tell me if this is a correct assumption? If so, why do you think this might be the case? And attached to that, the question, is J.TRAIN then a direct answer to this development?

Thanks, Christian. Claire will comment on the JEB question in a second. Let me, first of all, reconfirm our BMS collaboration is very healthy. It has been since 2016. I did mention in the last call that we see '26 for BMS for the collaboration as a transition year. We've been harvesting a healthy pipeline in the last years all the way to 2024. We have -- as I mentioned the last time, we've decided to refill the pipeline in '26, also based on investments into our technology platforms in the Omics space.

So here, in particular, the proteomics and the transcriptomics screening platform. So these investments have been made, and they will lead to a improvement in or revitalization of the pipeline going forward. That's why we also said last time that we expect the BMS collaboration to get back to growth as of next year, and I can confirm this is still the case. And I also want to remind you that we've successfully together announced that there is one candidate actually moving into the -- or moved into the clinic in oncology. So all of that is pretty healthy and not of a concern.

Yes. So maybe if I pick up on the JEB comment. So we still see on the full year, it just -- if we were to look at -- if we look at the JEB business and we exclude the Sandoz contribution to that and we exclude the DoW contribution in terms of the underlying growth of that base business, we continue to see growth year-on-year. So no concerns there in terms of the growth.

If we look to the future, then J.TRAIN, that creates an additional opportunity for us. So I would not say it's to replace anything else. It's on top of. And in addition to utilizing the capacity that we have in-house, this creates a further revenue and profitability stream for us going forward.

If I may ask a follow-up to the BMS topic, can we expect or model a similar scope to what we have seen in the past? I believe at one point, it was around 10 to 15x of revenues.

Can you further elaborate when you say 10 to 15x of revenues?

I mean, at one point, the -- you released to us that the largest key account was around 12%. I assume that was BMS. And if that is true, is this a scope you can -- or you expect to be generated by this partnership in the future?

I see. Okay. So I think it's certainly going to be in that range, possibly a bit a notch up compared to that number.

And the next question comes from Charles Weston from RBC.

If I can kick off with 2, the D&PD orders for the base business, you said, was up 28% and various other metrics were up, too. Presumably, this is off quite a low base in the prior period. So could you give us a sense of where those orders are versus "normal"?

Well, maybe one step back, if you -- I don't know whether we can go back to Page 7, which gives you a little bit of a picture of the 26 commercial indicators. If you -- yes. So that page...

I was just referring to the stand-alone business if that's okay. Okay.

Exactly. So that's the upper part of that graph. But maybe one step back, if you -- and I just mentioned that we have a new CFO on board, and Claire and the finance team has done a fantastic job unfolding the business and helping us to better understand the dynamics here. This is obviously not something we've been reporting in the past. So a great job done by the team to help us understand the underlying dynamics here.

But if you look at this or if you would look at the same picture, let's say, 2 years ago or a year ago, you would see over the 3 years that this picture 3 years ago, 2 years ago has been all red, which means that we have seen a declining trend in prospects, proposals, orders and revenues across all 3 levers.

So when I go back to 2024 in time, this was all red. And you start to see in '25 that the stand-alone is actually starting to turn green with prospects and proposals, right? And then, now you see the orders going up and also the integrated program, prospects and proposals. So that's a timing effect, and it also means that we've been consuming some of the backlog of previous years and actually backdates '23 probably when you think about the larger integrated programs and strategic partnerships.

So the -- you're right, the '25 first half was certainly on a low level. That's why when I spoke about the commercial indicators the last couple of quarters, I did mention that we've seen those leading indicators, we're leaving them behind. We believe that they have been -- we've been through the trough, and the fact that proposals and prospects are going up is just confirming that this seems to be a sustainable trend.

Yes. I mean, I think -- and as you look at the trend that you see in sales, and then, as this chart outlines, trend that you see in sales and the trend that you see in revenue, I mean, the 2, as we know, are -- the revenue is lagging the sales depending on the construct that we see here of the types of deal. There is -- we are coming off from a sales point of view, a lower base in '25, but that didn't necessarily -- if you look year-on-year revenue '24 to '25, it didn't necessarily show up because of that phasing impact where we had some of the carryforward impact from the year before prior year sales.

So in every -- and that's the work that Christian referred to that we've been doing is we've been trying to deconstruct our sales into what are the key elements of the sales, what are the drivers for each of those elements, what are the trends that we see, what are -- as we look forward, what are the leading indicators for each of them. And they all have quite -- they all have different leading indicators, and they all have different dynamics. So all of -- this is the first time that we've been able to deconstruct that and then build it anchored around the indicators that we've shared with you today. And we'll continue to do that, and we'll continue to refine that. That's something that's clearly important for us. But also, as we have more transparency, then we'll be able to comment much deeper in terms of how those indicators play out in the future.

Can I move on to the guidance? So the new guidance is -- has been cut for this year. What is your level of certainty around this? What is the level of ambition that's built into it? What amount of wiggle room do you have in order to account for any further slippage over the remaining 6 months?

Do you want to take it, Claire?

Yes. So I would say that we're confident as we look forward in the year to go. As I talked about, these 3 different areas that we've shared today, where we've broken down the individual sales drivers of each one, we've done really a deep analysis into each of them. We understand what the drivers are. We understand what the assumptions are and the level of likelihood that those will occur. We've also really considered the cycle timelines that Christian has outlined here, so what will convert to revenue in the second half of the year. So I would say that we have a high level of confidence around these numbers.

So it doesn't assume any further material new revenue driving contracts to be signed. It's kind of -- it's existing -- I think it presumably must be mostly existing revenue -- existing contracts playing out through their revenue recognition. I don't want to put words in your mouth, but is that fair?

No. And that's what we were -- the slide that we had the different timelines on. That was what we were trying to demonstrate through that slide and those conversion timelines. So if you think about, if you make a sale today, depending on which of those 3 buckets that sale falls into, that will be an indicator of how much revenue would hit in 2026 and how much would then fall into the subsequent years. And that's what we've used as we've looked then at the second half forecast. And that's why the middle of the year is an important anchor point because those timelines of conversion in the shortest bucket, that's really the bucket that could influence the remainder of the year for revenue in the back end of the year.

[Operator Instructions] The next question comes from Swayampakula Ramakanth from HCW.

This is RK from H.C. Wainwright. Just one question from me. What share of your profit, not revenue, has historically come from lumpy partner-controlled milestones? And at this point, are you re-resourcing towards recurring work so that you can manage that better?

That's a tough one because the nature of it is pretty lumpy, and it's not a flat line. So I'm checking here with Claire if we have some guidance on the milestone contribution.

It can vary quite significantly over the years. I think there's obviously a difference in profile between if you have a milestone payment that drops 100% down to profitability as compared to other revenue streams that are being converted based on our fixed cost absorption levels. So I think to give you a number that would say it's x percent for a specific year, that can vary quite dramatically year-on-year. So it would probably -- it would be -- I'm not sure it would be particularly helpful, would need to be on an individual year-by-year basis because of the variability.

Maybe just one follow-up comment to that. That's also a reason why we're trying to unfold the business here to give you better understanding that the base business is actually nicely coming around the corner with regard to top line and the implications of the strategic deals. So we will continue to look into that also for future meetings to make sure that there is better visibility on these components.

We have one more follow-up question from Christian Ehmann from Berenberg.

I would like to go back to the J.TRAIN. Maybe you can give us some idea about when this might have material impact on your revenues and earnings, and how we should view our models at least, view pricing and potential capacity, for example, over the next years, if you're already willing to share this with us?

Yes. Thanks, Christian, for the question. Consider J.TRAIN from a customer perspective also as a strategic decision, right? It's not something that is basically purchased in the supermarket. So those things also take their time. We have an excellent technology. We've got great conversations. We've introduced it to the market recently, as you've seen. So the feedback is good, but I would not guide you to have any expectations this year that there is already a signed deal. We just spoke about the time it takes to land strategic partnerships. I would see this in a similar time dimension.

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Sarah Fakih for any closing remarks.

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

Ladies and gentlemen, welcome to the Evotec First Quarter 2026 Financial Results and Business Update Conference Call. I am Moira, the chorus call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Sarah Fakih, EVP, Head of Global Communications and Investor Relations. Please go ahead.

Thank you, Moira. Good morning, good afternoon, and welcome to today's webcast and conference call. My name is Sarah Fakih, and I'm the Head of Global Communications and Investor Relations at Evotec.

Please allow me to introduce today's speakers. Joining me on the call are Christian Wojczewski, Chief Executive Officer of Evotec; and Claire Hinshelwood, our Chief Financial Officer. Our Chief Scientific Officer, Cord Dohrmann, will be available for the Q&A session. Please note that this call is being webcast live and will be archived in the event calendar on our website.

Before we begin, a few forward-looking statements. The discussion and responses to your questions on this call reflect management's views as of today, Wednesday, May 6, 2026. During this call, we will make statements and provide responses that state our intentions, beliefs, expectations or projections regarding the future. These statements constitute forward-looking statements within the meaning of applicable securities laws. They are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied.

Evotec disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. For further information regarding these risks and uncertainties, please refer to our public filings and disclosures.

With this, let me hand over the call to Christian.

Thank you, Sarah. Good morning, and good afternoon to everyone. Thank you for joining today's call. In the first quarter of 2026, we advanced Evotec's value creation levers, most notably with the initiation of the Horizon business transformation, which calibrates the company across the 3 pillars of operational excellence, science leadership and commercial execution.

As communicated during our full year 2025 results on April 8, we expected a strong year-on-year comparison for the first quarter, considering onetime revenue in the previous year quarter as well as continued softness in the early drug discovery market. In addition, we have started execution of the Horizon plan, which is designed to put Evotec on a path towards sustainable growth and greater profitability while navigating a still challenging market environment. As such, the quarter's major business highlights were characterized by a strong operational focus, important leadership enhancements and positive commercial indicators that support the next phase of our transformation.

Let me start with our Horizon initiative. During the quarter, we moved from announcement into implementation. We're making progress in the formal works council consultation processes across our European sites as well as in the preparation for our footprint and organizational adjustment measures. These steps are laying the groundwork for a more focused operating model, improved cost discipline and better alignment of our resources with strategic priorities.

This operational progress was accompanied by targeted expansion of our leadership team to support execution. Following the appointment of Ashiq Khan as Chief Commercial Officer last month, we further strengthened operational leadership with the appointment of Ingrid Muller to the Management Board as Chief Operating Officer. Both roles will be instrumental in moving our transformation forward.

On the commercial side, we see early signs of improvement in key leading indicators. Customer engagement has increased, and we have continued to build a pipeline of potential partnerships, which indicates our revamped commercial organization is already making an impact.

Turning to the headline quarterly financials. Group revenues came in at EUR 156.6 million, while adjusted group EBITDA was negative EUR 21.9 million. As mentioned before, this was primarily due to a challenging prior year comparison based on a one-off license sale in that quarter. Continued softness in D&PD demand and significant foreign exchange headwinds further enhanced the year-on-year step down.

We confirm our full year '26 guidance of EUR 700 million to EUR 789 million or EUR 730 million to EUR 810 million at constant exchange rates in revenues and EUR 0 million to EUR 40 million or EUR 10 million to EUR 15 million at constant exchange rates in adjusted EBITDA. We continue to expect an improvement in both revenue and profitability over the course of the year with performance weighted towards the second half.

This improvement is driven by anticipated market and DPD recovery, but also by increasing visibility across our strategic partnership pipeline. With respect to financial leadership, 2 weeks ago, we announced an orderly transition in the Chief Financial Officer role. Paul Hitchin decided to step down from his position effective April 30, 2026, for personal reasons. I would like to sincerely thank Paul for his extraordinary dedication and the skill with which he helped set Evotec on a path of strategic change during a period of transformation.

As of May 1, Claire Hinshelwood has assumed the role of Chief Financial Officer. Claire is with us on the call today, and I would like to extend a very warm welcome. Claire will ensure continuity in financial leadership and provide stability as we continue to recalibrate the company.

Before I move into the detailed quarterly review, I would like to give Claire the opportunity to briefly introduce herself. Claire, over to you.

Thank you, Christian, and good morning and good afternoon to everyone. It's a real pleasure to be joining you today, and I'm genuinely excited to take on the role of Chief Financial Officer at an important moment for the company.

I bring more than 30 years of experience in senior financial leadership roles and built much of my professional foundation at Syngenta, where I held a number of finance positions and developed deep experience in global finance, business strategy, performance management and governance within a strongly science-driven organization. Following that, I joined Novartis, where I worked across multiple regions, portfolios and regulatory environments, shaping my deep understanding of capital discipline, financial transparency and decision-making in the big pharma context.

Most recently as Group CFO of BMI Group, I led the transformation of the company's financial operations and delivered significant underlying improvements in its financial position during a period of particularly challenging market conditions. That experience strengthened my hands-on experience in managing change, stabilizing performance and creating financial resilience.

What attracted me to Evotec is its unique position at the heart of the life sciences ecosystem. This position is built on its well-established scientific excellence, a differentiated partnership-based business model and the potential of cutting-edge technologies such as the highly innovative Just-Evotec Biologics platform alongside a clear commitment to transformation through the Horizon initiative. As CFO, my priority is to ensure continuity and robustness in the financial leadership while supporting disciplined execution of the group's transformation agenda.

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

And with that, I'll hand back to Christian.

Thank you, Claire. On Slide 6, let me briefly follow with an introduction to Ingrid Muller, who also joined the Evotec Management Board on May 1 as our new Chief Operating Officer. Ingrid joins us from CureVac and brings over more than 20 years of international senior leadership experience in the life sciences industry, including prior roles at Sanofi and Fresenius Kabi, where she successfully managed complex operational environments and large-scale execution and transformation topics.

With a strong background across operations, strategy, supply, procurement and R&D integration, Ingrid oversees Evotec's D&PD operations and plays a central role in strengthening cross-functional execution, delivery performance and operational discipline. A key focus of her mandate is the implementation of the Horizon initiative, supporting improvements in quality, productivity, scalability and cost control across the organization.

Turning now to Slide 7 and our most recent news flow. We continue to make progress across key partnerships in D&PD that reinforce a consistent theme, our ability to deliver high-quality outcomes at speed and through AI-enabled integrated platforms.

This capability is increasingly critical across therapeutic areas and partner types where execution speed, reliability and scientific quality are essential. A good example is our public and global health work. Following engagements such as our collaboration with BARDA on Ebola and Sudan viruses, Preparedness, we received 2 new grants from the Gates Foundation to advance tuberculosis drug discovery and translational research, accelerating progress towards shorter, safer and simpler tuberculosis treatment regimes. Both areas leverage our AI-enabled discovery and translational platforms to deliver rapidly and efficiently.

The same strengths show in our medical dermatology collaboration with Almirall, where the joint team nominated a first preclinical development candidate progressing from lead identification to preclinical candidate in just 2 years, significantly faster than typical industry time lines. This milestone validates the efficiency of our AI and machine learning-enabled end-to-end data-driven discovery and preclinical model. The program is now advancing towards IND with continued support through our INDiGO platform.

Taken together, whether in public sector engagements, global health initiatives or pharma partnerships, these examples demonstrate the speed, efficiency and quality of our D&PD platforms.

With this, let me hand back the call to Claire for an overview of our financial results for the first quarter of 2026.

Thank you, Christian. Turning now to Slide 8, which shows our condensed income statement for the first quarter of 2026. Group revenues for the first quarter of 2026 amounted to EUR 156.6 million, representing a decrease of EUR 43.4 million or 21.7% compared to the same period in 2025. On a constant currency basis, Q1 group revenues decreased by 16.6% to EUR 166.9 million.

Group revenues were impacted by the continuous market softness for early clinical discovery as well as the nonrecurrence of a $25 million license sale to Sandoz in the first quarter of 2025 as well as negative foreign exchange effects for which I will go into more detail on the next slide.

Looking at the segments, revenues in D&PD decreased versus prior year by EUR 20.7 million or 14.7% on a reported currency basis to reach EUR 119.9 million, reflecting the mentioned challenging market environment and FX headwinds. Accordingly, at constant currencies, D&PD revenues declined by 10% to EUR 126.6 million compared with the prior year period.

Just-Evotec Biologics revenue decreased by EUR 22.6 million or 38% to EUR 36.8 million in the first quarter. The decline was primarily driven by the nonrecurrence of the $25 million Sandoz license sale in the first quarter of 2025 as well as the expected decline in DoW revenues, which were offset by the year-on-year growth of non-DoW/non-Sandoz revenues of approximately 50%. On a constant currency basis, revenues in the segment amounted to EUR 40.4 million.

R&D expenses totaled EUR 10.1 million, representing 6.4% of total revenue compared with EUR 14.9 million or 7.5% of total revenue in the first quarter of 2025. While continued investment in our technologies and platforms remains a core part of our strategy, spending in the quarter remained tightly focused on projects most relevant to our partners.

Adjusted group EBITDA for the first quarter of 2026 amounted to negative EUR 21.9 million compared with EUR 3.1 million in the prior year period. It totaled negative EUR 18.9 million at constant exchange rates.

At the segment level, adjusted EBITDA in D&PD decreased by EUR 2.9 million to negative EUR 9.8 million in the first quarter. At constant exchange rates, adjusted EBITDA amounted to negative EUR 5.5 million, broadly consistent with quarter 1 2025 EBITDA levels despite the aforementioned lower revenues in the segment, reflecting the impact of reductions in our structural cost base and business mix.

Adjusted EBITDA in the Just-Evotec segment decreased by EUR 22.1 million to negative EUR 12.1 million or negative EUR 13.4 million at constant exchange rates. The primary driver to the year-on-year change reflects the nonrepeat of the Sandoz license payment.

On Slide 9, let me go into more detail on the year-on-year movement in revenues by isolating the main factors that impacted performance in the first quarter. Compared with the first quarter of 2025, the decline in reported revenues was driven by 3 main factors. First, the negative FX effects, which were a meaningful headwind of EUR 10.2 million in the quarter, driven primarily by the U.S. dollar and the British pound. Second, the nonrecurrence of the $25 million or EUR 23.1 million Sandoz license payment that was recognized in the first quarter of 2025 in the Just segment. And third, a continued softness in the D&PD demand, reflecting the expected challenging market environment.

When adjusting for these effects, the underlying development is significantly more moderate. Excluding both foreign exchange and the nonrecurring Sandoz license, group revenues declined by 6% Accordingly, at segment level, the Just-Evotec Biologics results showed continued underlying momentum with revenues increasing by 11% when excluding the Sandoz license and currency effects, absorbing the expected decline in DoW revenues. As already stated, in D&PD, revenues declined by 10% on a currency -- constant currency basis.

Turning to liquidity and the balance sheet on Slide 10. Total liquidity in the first quarter of 2026 stood at EUR 444.8 million, representing a quarterly decrease of EUR 31.6 million compared with EUR 476.4 million at the end of the fourth quarter 2025. The balance sheet remains solid with the group continuing to hold a net cash position at the end of the quarter. The development in liquidity reflects a number of underlying dynamics.

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

And with that, let me hand back to Christian.

Let me now turn to Horizon and provide an update on the progress we made during the first quarter, shown on Slide 11. Horizon is designed to accelerate growth and promote agility by streamlining the organization around the 3 core pillars: operational excellence, scientific leadership and commercial execution. Since its announcement on March 10, Horizon moved from planning into active implementation with progress on the people and footprint-related measures. These actions are central to establishing a streamlined operating structure and improving cost base, centralizing technologies and strengthening capabilities critical to our strategy.

In the United States, we are progressing well with the exit of the Framingham site as we are consolidating our U.S. operational footprint. Across Europe, implementation is progressing, and we expect the majority of legally mandated works council consultations to be completed mid-2026. First personnel adjustments in Europe are expected to start within the third quarter of this year.

In the first quarter of 2026, we recorded EUR 75 million of reorganization cost provisions directly attributable to the Horizon restructuring measures. These mainly reflect personnel measures, including severance payments as well as impairment losses on property, plant and equipment and are based on estimates that are regularly reviewed and refined as implementation progresses.

As previously communicated, we continue to expect structural run rate savings of approximately EUR 75 million by the end of 2027, with around 20% to 30% of these savings expected to materialize in 2026.

Building on the strategic recalibration established through Horizon, we're taking a broader look at the group to ensure that our structure and positioning reflect the intrinsic value of our platforms and portfolio. Horizon fundamentally transforms how we operate, allocate capital, execute scientifically and commercially and compete more effectively in our markets.

With this optimized foundation in place, it's the right time to conduct a strategic evaluation to assess how the value being created through this transformation is most effectively realized within the corporate structure of the company. This includes our portfolio, capital structure and ownership framework.

As customary in such processes, the evaluation is being conducted with the support of experienced external advisers. There is no predefined outcome time line or commitment to pursue any transaction, and we will provide further updates if and when appropriate.

Let me now turn to Slide 12, which provides a perspective on commercial momentum in the D&PD business. The first quarter of 2026 shows a continuation of positive signals we began to observe already in the second half of last year. Importantly, selected indicators are stabilizing or improving compared to early 2025.

Starting with delivery stability, the decline in negative change orders we saw throughout 2025 and into early 2026 continued through the end of the first quarter, reaching levels below those recorded at the end of Q4 2025. This points to an increasingly stable delivery environment and higher customer confidence and investments.

Moving down the funnel, proposal activity in discovery and preclinical development reached the highest level of the past 12 months at the end of the first quarter. This suggests improvement in commercial outreach and higher levels of customer engagement over the past year.

These upstream indicators are complemented by continued progress in our execution metrics. Proposal turnaround times in discovery and preclinical development improved further and reached levels below the average number of days in 2025. This improvement reflects increasing efficiency in internal processes and better coordination between commercial teams.

At the end of the funnel, net sales orders in the first quarter of 2026 remained broadly stable compared with Q4 2025. And viewed in combination with the reduction in negative change orders, the overall trend is positive. At the same time, net sales orders increased by approximately 15% year-on-year.

Given Evotec's business model, revenues are influenced by strategic partnerships and milestone-driven activities, which by nature can lead to timing-related volatility rather than linear quarter-to-quarter progression.

We're seeing a range of activity and maturing discussions, spanning collaborations with pharma partners on opportunities around the out-licensing of differentiated biological targets as well as access to our molecular patient database. While these discussions are at different stages, their breadth reinforces our confidence in the strength of our D&PD platforms and supports a more positive outlook as the year progresses. Overall, the commercial transformation is progressing as planned. While it's still early, these metrics give us increased confidence that we are seeing initial signs of stabilization.

Before we turn to your questions on Slide 13, let me briefly summarize the key takeaways from today's presentation. As expected, our financial results in the first quarter of 2026 fell significantly compared with the same quarter last year due to a number of factors that we do not expect to persist into the rest of this year.

As we begin the implementation of Horizon, we expect to begin seeing impacts in the latter half of 2026 with 20% to 30% of the estimated structural run rate savings of EUR 75 million being realized in 2026.

We have already taken significant strides in implementing Horizon by strengthening our leadership in key commercial and operational roles, progressing our footprint reduction plans and improving our commercial execution. Relevant to this last category, we have seen multiple leading indicators trending positive and expect to see the downstream effects of that early activity in future quarters.

Our recent progress in drug discovery and preclinical development collaborations reinforces a consistent theme, the ability to deliver high-quality outcomes at speed through AI-enabled integrated platforms. Whether in partnered programs such as dermatology with Almirall, global health initiatives supported by the Gates Foundation or public sector engagement with BARDA, we continue to demonstrate that our D&PD capabilities can be applied across therapeutic areas and use cases where speed, reliability and execution quality are critical.

With a strong plan for transformation that is being implemented at pace, leading indicators showing increasing business activity into the second half of 2026 and the strengthened leadership team that is focused on putting Evotec on the path to strong sustainable growth, we expect to see consistent improvements in our financial results across the coming quarters.

With this, I would very much like to open the call for your questions.

[Operator Instructions] The first question comes from the line of Swayampakula Ramakanth from HCW.

Just a couple of them. As you're keeping your full year guidance, and it looks like there is a -- if you maintain that, it looks like there needs to be a ramp-up in quarterly revenues from here onwards from the second to the fourth quarter. How confident are you that you can gain that ramp going forward?

And the second question is on the strategic review on the Horizon, just trying to understand how you're going to sequence it. Do you need to get on the Horizon completely implemented when you're thinking about the strategic review of the group? Or is that going to be parallel?

Okay. All right. Thank you. I'll start with the second question. I hand over to Claire for the first and maybe take it back afterwards.

On the Horizon topic, the answer is no. We know what we're executing against and what our plans are. As I said earlier, Horizon is upgrading our operating model, reducing complexity and making us more agile. We know precisely what we have to do. We are not required to wait.

First question, Claire?

Okay. So on the full year guidance then, as Christian mentioned, as we were going through the introduction, the revenue, of course, is not linear because of the significant impact that we see from milestones and strategic deals.

And if I take you back to a slide that Paul shared during the year-end presentation a couple of weeks ago, on that slide, he split down the dynamics that we were expecting for both half 1 and half 2. And on that slide, it outlined that for half 1, we would see, of course, the onetime negative impact from the Sandoz deal. We would expect to see underlying growth in the -- Just business, excluding the impact of DoW and Sandoz and which is what we've seen. We've seen up to roughly 50% underlying growth there.

And we also highlighted that we would continue to see a challenging but improving situation in the D&PD environment, and we would have a negative FX impact. If you actually look at what the Q1 results show, it's very much in line with what that half 1 trajectory was expecting. Then when you look into half 2, we start to see the impact coming through on the strategic partnerships, and that's where we'll see the upturn. And then we'll also start to see the recovery of the D&PD underlying business. And it's the dynamic of those large strategic partnerships and the milestones that are making the difference between what you see in the first quarter and when you look at the full year outlook. But everything was in line with what we shared in that slide during the year-end presentation.

That was fantastic. Can I do a quick follow-up, please? So if you look at the gross margin, which was negative 1%, it's kind of striking initially. But underneath it, I'm imagining certain things which Claire just talked about, whether it is the FX effect or the Sandoz effect. How much of that is true? And is there anything else that we should be thinking about? And what needs to get done so that our gross margin gets back into the positive territory?

So I mean, all of what -- I won't repeat what I just said a second ago. I think the other thing that you're going to see coming through is as Horizon is implemented, then clearly, there's an under-absorption that we see today in some of our sites that's having a drag effect on the margin. And as we move forward with the Horizon implementation, then you'll start to see that significantly reducing, and that will then have a positive impact on the margin going forward.

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

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

Thanks, Charles. And maybe starting with the first topic. When you look at the D&PD business, the way that you should obviously think about this is what you see in the first quarter revenues is the result of sales orders that were basically done or negotiated 9 to 12 months ago, right? So we've been consistently talking about a soft market environment last year. Now that's a result of last year.

Going forward, I think the indicators I didn't mention here. First, on the not strategic business, fewer cancellations gives us more confidence that the biotech market is also recovering because there is more confidence in investing into projects. Secondly, when you look at the sales orders, we've now seen actually the third quarter in a row better performance compared to what we've seen in Q1, Q2 last year. So Q3 was better than Q2, Q4 was better than Q3 and the first quarter was also in line with the fourth quarter. That takes a bit of time to materialize, obviously. But these indications for us are strong signals that we're moving in the right direction.

With regard to strategic relationships and partnerships, usually, obviously, that's more digital events, right? So you negotiate and either you do a deal or not or you do the deal now or you do it 6 months later. So there's no real KPI behind that. But we see that a lot of these discussions have been picked up again. When they ultimately will be executed is -- you can't put it precisely into one quarter, Charles.

And maybe to put it also a little bit into perspective, when you look at the Q1 results, when I look at the D&PD business, the last couple of quarters and this is all published. So quarter-by-quarter revenue swings last 2 years were easily in the range of EUR 10 million to EUR 20 million. Why is that also partially because of our business model, strategic deals, milestone payments, license payments. So Q4 '25, for example, versus Q3 was 12% up. Now you look at Q1 versus the Q4 quarter was 13% down. The quarterly picture is not necessarily indicative of the full year results. The same is true for Just. There's even bigger swings, as you can imagine.

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

Sorry, lengthy answer, but I hope it gives some flavor.

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

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

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

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

I would like to linger a bit on the H2 performance or guidance of that, if I may. So would it be fair to assume that because you mentioned something about the impact of strategic partnerships and milestones and royalties and so forth. Would it be fair to assume that in your expectations to reach your guidance over the next couple of quarters for the full year, you would say that you see an improvement, so up from minus 10% underlying now to the low single digit you have given us for the reported number for the full year? So would it be fair to assume to say, okay, we would expect an improvement of -- or a turnaround to slight growth rates over the couple of, let's say, in the beginning of H2? And to top it off, we would expect a partial contribution from milestones. Just want to get an idea how significant or how impactful those milestones would need to be to achieve the target?

The second question is in regards to the net sales order progression. Is there a seasonal pattern? So when you say you have quarter-over-quarter flat development Q4 to Q1, is this a usual pattern because we -- there's obviously a downturn compared to the recovery we saw in the quarters before?

And the last question would be in regards to the new efforts from AI-first companies. So do you plan on giving us or the market more color on this, i.e., with a Capital Markets Day or maybe an Investor Day?

Christian, number one, yes, it's fair to assume that we are assuming a slight underlying growth in the D&PD business towards the end of the year. It's also fair to assume that we're assuming strategic deals to contribute to that. It's also fair to assume that we have a list of opportunities here we're working on. So all of your statements are correct. And then basically, given that we have confirmed guidance, you can basically calculate what it means for second half growth.

On the second topic of order progression, can you shed a bit more flavor or light on what your question is behind there?

So you mentioned to us that Q3 was better than -- so year-over-year, Q3 was better than '25 was better than '24. Q4 was better than Q4 '24. And now Q1 is flat compared to the Q4 '25, if I heard it correctly. So it indicates to me a delay of improvement or recovery or at least a flattening of the curve. Is that correct?

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

Yes, is there a pattern here.

See, first of all, when I look at Q1 order intake in D&PD versus a year ago, we are double digit up. So that tells you that it has been a good quarter in terms of new sales, but it was also a good quarter for us in the fourth quarter last year.

I think from a revenue profile perspective, the events around milestones have a bigger impact than the seasonality. So there is some seasonality. We've seen in the last couple of years that usually the fourth quarter is a strong quarter, and that is probably the last 3 years. But I would also not overemphasize the seasonality.

And the last topic was an AI-related topic. So please also specify a little bit the question around the companies that you mentioned.

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

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

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

So I heard your earlier comments on the Q1 performance and that we should view the lower profitability during Q1, probably as more investments, maybe in anticipation of upcoming contracts and so on and so forth. So if we summarize all your comments, is it fair to assume that Q1 was now the trough in operating performance? So if we think about the second quarter that both in terms of revenue and adjusted EBITDA generation, we should see first slight improvements. This would be helpful.

And then my second question on the strategic review that you now initiate. Was there any specific trigger for you to consider this now? I mean, as a company, you've been approached in the past, we read about individual shareholders stepping up more recently and proposing some changes? Or is it linked to simply operating performance? Any sort of thoughts you could share with us here would be very helpful.

Thanks, Fynn. So first of all, your first question, I think I just tried to lay out a little bit that the quarterly view is not always helpful with the swings also with the profile that we have in terms of milestone payments. So I'm not sure I want to guide on individual quarters. We've never done that before. Important message is we stick to our guidance for the full year, which means that the first quarter will be even out over the next 3 quarters.

With regard to the strategic review, I can say that this was not initiated in response to any inbound interest. It's a very logical timing when you think about what we're doing. We are resetting the company mid last year. We've revised our long-term view, vision for the company towards tech and scientific leadership, our positioning, the competencies that we need. In March, we've announced Horizon, which basically defines our operating model to deliver that business strategy. That's now the next logical step.

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

Now I was listening to your previous answer where you said you weren't going to give quarterly guidance, but I'm going to ask perhaps again anyway, in particular, around Q4. So Q4 is often a Q4 weighted year just traditionally. Also, you've got your market improvements expected. You've got the strategic revenues coming through and you've got the Horizon savings. So could you perhaps give us some color on how Q4 weighted to EBITDA could be? Looking back at the last couple of years, it was a loss for the first 3 quarters and a substantial profit in the fourth. Could that be the same or exacerbated even more? And perhaps I just wondered if you'd like to provide any color around what we might expect in Q2, whether there are any puts and takes in the comp that we might want to bear in mind for our modeling.

Thanks, Charles. And I think we iteratively approach actually move from year-to-quarter. And I won't do the quarter view, but I won't actually help you with a half year view. As you probably will remember, we've done that last time. It's really the dynamic difference here between H1 and H2 that Claire was explaining.

When you look at the changes for the second half, we did mention that we expect a further negative impact from the JEB licensing versus 2025. However, a positive impact from JEB growth, actually in the range of double-digit growth, excluding DoW. Then there is a positive impact from underlying D&PD growth, where we said low single-digit growth in the base business and then strategic partnerships will add on top. But we also said that the FX effect will persist. So that's our view. And we're not breaking it down further by quarter, knowing exactly why because the quarterly volatility is not helpful.

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

Okay. So the sentence stops halfway, but I guess I get the question. We think it's a timing topic, as alluded to earlier, there's obviously 2 ways of looking at it. The funding situation seems to have stabilized in the last couple of actually months from a biotech perspective, that's the external view.

The internal view, I alluded to cancellations have come down quite significantly. Now some of the cancellations were more scientific and strategic nature in the past, but some also where biotech companies have pulled off for other reasons. We've seen this decline also in the context of more confidence of biotech companies in funding. So that's the internal view.

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

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

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

Ladies and gentlemen, welcome to the Fourth Quarter and Full Year 2025 Financial Results. My name is Joseph, the Chorus Call operator. [Operator Instructions] This conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or for broadcast.

At this time, it's my pleasure to hand over to Sarah Fakih, Head of Global Communications and Investor Relations. Please go ahead.

Thank you, Joseph. Good morning, good afternoon, and welcome to today's webcast and conference call. My name is Sarah Fakih, and I'm the Head of Global Communications and Investor Relations at Evotec. Please allow me to introduce today's speakers. Joining me on the call are Christian Wojczewski, Chief Executive Officer of Evotec; Paul Hitchin, our Chief Financial Officer; and our Chief Scientific Officer, Cord Dohrmann, will be available for the Q&A session. Please note that this call is being webcast live and will be archived in the events calendar on our website.

Before we begin, a few forward-looking statements. The discussion and responses to your questions on this call reflect management's views as of today, Wednesday, April 8, 2026. During this call, we will make statements and provide responses that state our intentions, beliefs, expectations or projections regarding the future. These statements constitute forward-looking statements within the meaning of applicable securities laws.

They are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied. Evotec disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. For further information regarding these risks and uncertainties, please refer to our public filings and disclosures.

With this, let me hand over the call to Christian.

Thank you, Sarah. Good morning, and good afternoon to everyone. Thank you for joining today's call. Let me start with the headline results for 2025 and the first months of 2026. '25 was a year of significant progress for Evotec as we laid critical groundwork for the company's next chapter of sustainable and profitable growth. Throughout a persistently challenging market environment, we remained anchored in the strength of our science and the dedication of our teams, which continue to be the foundation of our performance.

Building on these fundamentals, we introduced a new company strategy in 2025 that defined our priorities and now guide the transformation work underway in 2026 and beyond. Our four levers of midterm value creation, scientific leadership, operational excellence, better monetization of Just-Evotec Biologics and capturing pipeline value have already translated strategy into targeted action.

As a result of this work in 2025, we have delivered more than EUR 60 million in annualized cost savings, streamlined our asset pipeline and reduced our capital expenditure by around 60%, important steps that have strengthened our balance sheet and our financial resilience. Against the challenging market backdrop of 2025, financial results were at the high end of our guidance range and Paul will go into more detail on that later in this presentation.

Both segments of Evotec business have contributed to our progress in the past year. Discovery and Preclinical Development continued clinical advancement across partner programs, delivered milestones and underscored the productivity of our platforms despite continued softness in early-stage biotech funding. Just-Evotec Biologics delivered a breakthrough year supported by the landmark agreement with Sandoz and continued progress across global health programs.

And last month, we kicked off our Horizon initiative, a comprehensive transformation of our operating model. We are already making substantial progress across the three Horizon pillars of operations, science and commercial execution. The last of which recently saw the appointment of a new Chief Commercial Officer, reinforcing our commitment to building a more agile, customer-focused organization. As Horizon implementation continues, we expect to see the first structural and financial benefits in the second half of 2026.

Turning to the progress in our Discovery and Preclinical Development segment on Slide 5. We saw robust clinical and scientific advancement over the past 12 to 18 months, across key therapeutic areas, including oncology, neurodegeneration and kidney disease, as well as exciting developments in emerging modalities such as condensate modulation. During this period, and as already reported during our Q3 results in November 2025, two partnered assets moved into Phase II clinical studies. Since then, a partnered preclinical asset advanced to a first in human Phase I study, bringing our partnered clinical portfolio to a total of 2 programs in Phase II and 5 programs in Phase I.

Let me briefly highlight the progress within some of our key alliances. In our cancer protein degradation collaboration with Bristol Myers Squibb, we are jointly developing a broad pipeline of next-generation molecular glue degraders, a revolutionary modality with a potential to target previously undruggable disease-causing proteins and an area in which BMS is the clear industry leader. The first candidate progressed from IND acceptance in November 2025 into a

Phase I clinical study in March 2026 in advanced clear cell renal cell carcinoma, the most common form of kidney cancer.

These advancements, which validate the strength of our screening and AI-supported analytical platforms resulted in milestone payments of $5 million and $10 million, respectively. In our neuroscience partnership with BMS, we achieved continued progress across a jointly developed preclinical pipeline focused on therapies for neurodegenerative disorders, triggering a $25 million milestone payment in October 2025.

Lastly, in our kidney disease partnership with Bayer, a Phase II clinical study in Alport syndrome, a rare genetic kidney disease was initiated in December 2025, underscoring our discovery and translational capabilities in renal conditions. The momentum across these collaborations highlights our ability to translate our outstanding science into a successful clinical [indiscernible]. It validates our platforms and carries through on our fourth strategic lever, capturing pipeline value as assets advance to generate meaningful financial upside. Looking ahead, we expect the total number of assets in Phase II to have grown from 2 to 4 during 2026.

Turning from our small molecule business to biologics, let me give you an overview of our Just-Evotec Biologics segment on Slide 6. 2025 was a breakthrough year for JEB defined by a strategic pivot away from a capacity-constrained manufacturing model toward an asset-lighter technology-focused partner enablement model. This evolution centered on our highly differentiated continuous manufacturing platform is reflected in the news flow throughout the year, featuring technology-enabled partnerships and significant progress in global health programs.

However, the defining milestone for JEB was the completion of our strategic agreement with Sandoz, which closed in December 2025. The agreement is valued at $650 million with additional royalty potential for 10 biosimilars, the sixth most advanced of which have an originated value of about $92 billion.

Further recent developments include a multi-year BioMaP-Consortium award of up to $10 million from the U.S. government, Biomedical Advanced Research and Development Authority. The program aims to optimize the biomanufacturing of monoclonal antibodies against Ebola and Sudan viruses, strengthening preparedness for hemorrhagic fever outbreaks. In January 2026, we also expanded our long-standing collaboration with the Gates Foundation, receiving a new grant supporting 10 new molecule design projects over the next 3 years. These projects apply our AI and computation-driven J.MD platform to improve antibody developability and advanced access to affordable biologics.

Taken together, these advances show how JEB is evolving into a high-margin, technology-driven business with durable long-term value creation potential firmly validating JEB as a core pillar of future growth ambitions.

Let me now hand over the call to Paul to walk you through our financial results.

Thank you, Christian, and a warm welcome from my side as well. On Slide 7, you can see our condensed income statement is in line with the preliminary unaudited financial results we provided as part of the Horizon Communication on March 10, 2026.

For the fourth quarter of 2025, group revenues increased by EUR 32.1 million or 14.5% to EUR 253.3 million. And for the full year 2025 decreased by EUR 8.6 million or 1.1% to EUR 788.4 million compared to the same period in 2024. On a constant currency basis, Q4 revenues grew by 21% and full year revenues grew by 1.7% compared to 2024.

While the broader CRO market showed early signs of recovery in 2025, the environment for early-stage drug discovery remained challenging. As a result, the full year revenue decline was primarily driven by lower revenues in our D&PD segment, where revenues declined by EUR 27.3 million or 16.6% to EUR 137.1 million for the fourth quarter and by EUR 82.5 million or 13.5% to EUR 528.9 million for the full year compared to the prior period.

Unfavorable foreign exchange movements represented an additional headwind to full year revenues of 2.8%, driven by the U.S. dollar and British pound. However, those effects were largely offset by strong performance in Just-Evotec Biologics segment, including the positive contribution from the Sandoz transaction in the fourth quarter of 2025.

Revenues within Just-Evotec increased by EUR 59.4 million or 104.2% in quarter 4 and by EUR 73.8 million or 39.8% and to EUR 259.4 million for the full year 2025 compared to 2024. This growth was driven by the continued progress in the Sandoz partnership, including an incremental contribution from a license payment of approximately EUR 65 million in the fourth quarter.

While revenues from the U.S. Department of War-related activities declined in the second half of 2025, following announced budget cuts, revenues of our non-Sandoz and non-DoW customers continue to grow by more than 60% in the full year.

Fourth quarter costs in Just-Evotec were temporarily elevated versus the underlying run rate driven by additional expenses associated with the Sandoz transaction and temporarily higher material costs, both of which are expected to normalize early 2026. In line with our guidance, R&D spending decreased further and amounted to EUR 37.5 million or 4.8% of total revenue for the full year 2025 compared to EUR 50.9 million or 6.4% of total revenue in 2024.

Investing in our technologies and platforms remains a core part of the strategy and we will continue to allocate capital to scientific capabilities and technology leadership while maintaining a balanced investment approach in a challenging macroeconomic environment. Adjusted group EBITDA increased by EUR 29.5 million or 103.6% to EUR 58 million in the fourth quarter and by EUR 18.5 million or 81.9% to EUR 41.1 million for the full year of 2025 compared to the same period in '24.

Adjusted EBITDA in the D&PD segment decreased by EUR 12.6 million to EUR 6.8 million in the fourth quarter and by EUR 24.7 million to minus EUR 12 million in 2025 primarily driven by the aforementioned lower revenues, which contracted faster than the cost base, creating internal overcapacity and weighing on segment profitability, underscoring the need for the operational transformation program recently announced as part of Horizon.

Adjusted EBITDA in the Just-Evotec segment increased significantly by EUR 42.1 million or 463% in the fourth quarter and by EUR 43.3 million or 443% to EUR 53.2 million in 2025 compared to the prior periods. This strong result reflects continued progress in the validation of our continuous manufacturing technology as well as favorable shift in revenue mix towards higher margins and an asset-lighter technology enablement model.

Turning to liquidity and the balance sheet on Slide 8. We closed 2025 in a solid position. At year-end, cash liquidity stood at EUR 476 million, representing a strong balance sheet with a net cash position. The improvement in our cash liquidity reflects disciplined financial execution, including the monetization of technology leadership through Just-Evotec Biologics, the realization from maturing equity stakes including the upfront payment from the sale of our minority stake in Dark Blue Therapeutics and our continued shift toward a capital-efficient operating model with CapEx spend reducing 38% year-on-year. Importantly, we entered 2026 with no active financial covenants, providing us with a high degree of financial flexibility.

Now let me hand back to Christian, who will provide an update on some of our key revenue impacts.

Thank you, Paul. To further contextualize our 2025 results and frame the trajectory into 2026 and beyond, let me briefly address one of our key strategic levers, our long-standing partnership with Bristol Myers Squibb. From 2016 to the end of 2026, our two BMS collaborations in urology and oncology are expected to have generated close to EUR 800 million in cumulative revenues. At their peak, they accounted for more than 20% of group revenues making BMS one of the most significant and successful strategic relationships in Evotec's history.

With this partnership, the oncology collaboration today represents a larger contributor to BMS-related revenues. As illustrated on Slide 9, it has evolved through distinct phases from platform built out to expansion and now into portfolio maturation. These phases are characterized by alternating periods of investment and harvest, which are naturally reflected in corresponding changes in revenue contribution.

Since the peak in 2023, revenues from the oncology collaboration have declined by more than 1/3 over the 2023 to 2025 period. This reflects a shift into a renewed investment phase focused on molecular glues and areas of exceptionally high scientific and commercial potential. While this transition has temporarily increased cost intensity and weight on D&PD profitability, it does not signal a weakening of the collaboration. Rather, it reflects the cyclical nature of a large multi-program discovery alliance.

Looking ahead, it's important to recognize that the collaboration is already creating value in its current phase with a focus on building scientific depth and portfolio quality. While this phase continues to require investment, the scientific value being created today is expected to translate into renewed revenue growth and improved margins.

Importantly, this fluctuating profile is expected to evolve as programs progress through the clinic. With the first joint asset having recently entered Phase I, clinical stage programs are expected to progressively complement the base business from 2027 onwards. This clinical progression will have smooth revenue fluctuations, add new growth drivers and support the margin expansion underpinning our midterm framework, which Paul will discuss in more detail later in the presentation.

Continuing on Slide 10, I would like to address the second factor that significantly impacted our '23 to '25 revenue profile, alongside our BMS collaboration, the evolution of our EVOequity strategy. Between 2016 and 2022, we invested approximately EUR 200 million to build up an investment portfolio of approximately 40 early-stage biotech companies. The objective was to gain early access to innovation while generating revenues to our role as an operational and scientific partner. At its peak, this portfolio generated close to EUR 100 million in annual revenues.

As these companies advance into clinical development, their strategic relevance for Evotec naturally declined. This was accompanied by a reduction in our operational involvement and consequently lower revenue contribution. We've, therefore, moved decisively into the monetization phase of this strategy.

Following the divestment of recursion, generating proceeds of nearly $70 million at the end of 2024 and additional access throughout 2025, we have significantly reduced our equity exposure. As of year-end 2025, 29 investments remain with our strategic focus shifting from revenue contribution to value realization. These divestments represent pure upside for Evotec.

Recent transactions include the sale of our stake in Dark Blue Therapeutics following its acquisition by Amgen in a deal valued at approximately $840 million, generating an initial cash consideration for Evotec of around $13 million. In addition, the recently announced sale of Toulouse in a transaction valued at approximately $5 billion is expected to deliver cash proceeds of around $100 million to Evotec at closing. In both cases, the upfront amounts are complemented by meaningful contingent milestone payments of more than $150 million, providing additional future upside. EVOequity is transitioning from a cash out to a cash realization model. As operating involvement declines by design, the associate [indiscernible] will fade away in 2026 and beyond as we wind down the portfolio.

On Slide 11, let me briefly remind you of Horizon, our major operating model transformation and a core element of Evotec's value-creating strategy. We introduced the Horizon transformation earlier this year to implement a new and focused operating model built across the three pillars of operational excellence, scientific leadership and commercial execution with the goal of creating a more agile, more focused and more competitive Evotec.

Under the operational excellence pillar, we are streamlining our footprint from 14 to 10 sites in '26 and '27 with planned closures of sites in Abingdon, Munich, Lyon and Framingham. This continues our shift from a dispersed multisite structure to a focused network.

The footprint optimization also anticipates a reduction of approximately 800 positions across affected locations and enabling functions, a necessary step to align capacity with demand and reinforce execution discipline. Under the scientific leadership pillar, Horizon will consolidate key capabilities into dedicated centers of excellence, each with clear mandate and end-to-end accountability, strengthening our ability to deliver integrated high-quality signs.

And finally, under the commercial execution pillar, we're expanding our commercial organization and upgrading how we engage with customers under new leadership. Following the appointment of our new EVP and Chief Commercial Officer, we will accelerate growth, drive a more integrated go-to-market model and increase strategic partner engagement to improve our win rates across high-value mandates.

We're now progressing at pace through the required legal and regulatory processes to deliver a structural run rate savings of approximately EUR 75 million by the end of 2027. These savings primarily reflect a structurally lower cost base resulting from targeted workforce reductions and reduced footprint related to overheads as we consolidate our global operations.

We expect between 20% and 30% of the total savings to materialize in 2026, with the remaining majority becoming visible in 2027. Horizon is a defined time-bound realignment with a clear end state. We plan to execute swiftly and only once. Importantly, we do not expect material disruption to ongoing customer and partner programs.

In the context of expanding our commercial organization under new leadership on Slide 12, we are very pleased to welcome Dr. Ashiq Khan as our new Chief Commercial Officer. Ashiq joined Evotec at the beginning of April, bringing more than 15 years of international leadership experience across biotech, COO and AI-driven discovery platform companies. He has closed multibillion-dollar agreements and led business expansion in markets around the world, including several years at Schrodinger where he helped advance AI-enabled drug discovery partnerships and closed major strategic pharma agreements. With a strong track record of driving growth and closing high-value deals worldwide, Ashiq will lead the build-out of a globally integrated fit-for-purpose commercial organization at Evotec.

Let me now show you on Slide 13 how our leading commercial indicators are beginning to move in the right direction. It's a new commercial organization we're putting in place is gaining traction. The selected indicators shown here are ordered along the commercial funnel from early customer engagement through to net sales progression and provide us with an early view of business momentum ahead of reported revenues. Over the course of 2025, and into early 2026, we have seen a strong decrease in negative change orders. At the same time, the number of proposals submitted to customers in our Discovery segment has steadily increased reaching levels around 50% higher than at the start of 2025.

While this reflects improved commercial outreach and a more systemic engagement with customers, activity in preclinical development has not yet achieved the same momentum, reflecting a low number of fully integrated discovery to development customer engagements.

In parallel, the aggregated value of the proposals in the Discovery segment has increased. Streamlining our sales and delivery processes has further led to improvements in execution metrics. Proposal turnaround times have been significantly shortened. And these improvements are translating into better order dynamics and reinforce our assessment that the new commercial organization is operating more effectively. These leading commercial indicators are now feeding through to sales performance.

D&PD sales orders declined in 2024 and reached a trough mid of 2025. They recovered towards the end of the second half of 2025 and have since stabilized above early 2025 levels. Today, we are seeing our deal pipeline growing with increasing interest from potential partners. Looking forward, our differentiated technology platforms are expected to enable a higher number of strategic technology-driven deals starting in the second half of 2026. While it is still early, we see initial indicators of recovery and the commercial transformation in D&PD being on track.

Let me hand back to Paul to provide an overview of our path to sustainable growth in 2026 and beyond.

Thank you, Christian. On the next few slides, I'd like to take you through the building blocks of our 2026 outlook and how the measures we've discussed today translate into our medium-term framework.

Let me begin with our full year 2026 outlook on Slide 14. As outlined in our Horizon communication on March 10, we view 2026 as a transition year with Horizon measures phasing in over the course of the year. For the full year, we guide toward the group revenues of approximately EUR 700 million to EUR 780 million and incurred foreign exchange rates and EUR 730 million to EUR 810 million at constant exchange rates.

Adjusted group EBITDA is expected to fall within the range of approximately EUR 0 million to EUR 40 million of incurred foreign exchange rates and EUR 10 million to EUR 50 million at constant exchange rates.

Turning to the phasing of the year. The first half of 2026 will reflect transformation actions already initiated under Horizon. While we see an improvement in our commercial indicators, we still expect a weaker first half driven by the continuation of early drug discovery market softness seen in 2025 and the nonrecurrence of the $25 million Sandoz license that contributed to the first quarter of 2025.

In the second half of the year, we expect a strengthening profile, driven by an increasing number of strategic partnerships and a market recovery. Looking at the segments, Just-Evotec Biologics is expected to maintain a strong underlying growth, recognizing the nonrepeat of the EUR 65 million Sandoz license payment in the fourth quarter of 2025. Non-Sandoz and non-DoW activities are expected to grow by about 40% for the full year of 2026. This more than offset the expected continued decline in the DoW-related revenues following the announced budget cuts and foreign exchange headwinds.

In D&PD, we expect soft stand-alone revenues in the first half of the year, with a recovery to low single-digit growth in the second half. In addition, we expect our strategic technology-driven partnerships, to contribute more visibly in the second half, creating incremental commercial opportunities supported by our differentiated platforms. Taken together, these effects are expected to bring full year D&PD revenues into the low to mid-single-digit growth range.

For the full year 2026, foreign exchange is expected to represent approximately 3.5% headwind to group revenues. Beyond revenues, operational improvements resulting from the Horizon transformation are expected to become increasingly visible in the second half of 2026, with roughly 20% to 30% of the EUR 75 million in structural run rate savings expected to materialize in the second half of 2026.

In addition, removal of the cost drag from the sale of the [ Just-Toulouse Site ] will benefit our Just-Evotec Biologics business contributing an estimated EUR 20 million year-on-year improvement in segment earnings.

Having discussed our full year 2026 guidance, let me now broaden the time horizon. And on Slide 15, briefly remind you of our new midrange framework through to 2030, which we announced in March 2026. This framework reflects the phased trajectory from 2026 to 2030 and is designed to align the timing of Horizon transformation measures with the expected evolution of the revenue mix across our two business segments. Within our multi-stage horizon transformation journey, focusing on commercial excellence, operational simplification and technology leadership, we expect group revenues to grow to more than EUR 1 billion for 2030, with an adjusted EBITDA margin expected to reach 20% by 2028 and exceed that level by 2030.

The midterm margin progression is supported by a combination of external recovery and internal structural improvements. Externally, we expect the early-stage discovery market to continue normalizing as industry innovations rebound. Internally, the trajectory is driven by the recurring structural savings from Horizon, a continued shift towards higher margin and more capital-efficient revenue streams and increasing operating leverage as growth and productivity resume.

The key drivers and building blocks that underpin the anticipated midterm margin expansion are illustrated on Slide 16. We see the D&PD segment growing at high single digits from 2026. This reflects both the stabilization of early-stage drug discovery market and the transition into the realization phase of our BMS collaboration, which will contribute approximately 50% of the expected D&PD earnings growth between 2026 and 2028 as jointly developed assets progress into and through the clinic.

The Horizon cost reductions across our operating capacity, footprint and SG&A are expected to contribute 9 percentage points of margin expansion. As previously noted, we expect to reach the full run rate effect of these savings by the end of 2027. In the Just business, the continued expansion of our customer base, together with new revenue streams from the proprietary platform components such as our cell line, cell culture media as well as license opportunities support ongoing margin expansion. These building blocks take us to the expected 20% adjusted EBITDA margin by 2028. Further margin expansion is then projected to come from improved levels of automation and productivity, notably in our D&PD operations, post 2028 margin expansion in the Just-Evotec business is additionally reflecting royalties for the commercialization of the 10 biosimilars under the recent Sandoz transaction.

With this, let me hand the call back to Christian.

Before we sum up today's presentation, I would like to share an important governance update. Evotec's Supervisory Board has proposed Dieter Weinand for election as new Chairman at our new Annual General Meeting on June 11, 2026. Dieter is a highly respected industry veteran with more than 3 decades of global pharmaceutical experience. He has held senior executive roles at companies including Bayer, Pfizer, Bristol Myers Squibb and Sanofi and most recently served as President, CEO and Chairman of Bayer Pharmaceuticals.

He brings deep commercial expertise, a strong track record of driving performance and disciplined execution as well as extensive board and governance experience. This makes him very well positioned to support Evotec in its new phase, particularly as we sharpen our focus on [indiscernible] and profitability.

At the same time, I would very much like to express our sincere gratitude to Professor Dr. Iris Low-Friedrich for outstanding leadership and long-standing commitment as Chairwoman of the Supervisory Board, and for the important role she has played in shaping Evotec's strategic development.

Before we turn to your questions on Slide 18, let me briefly summarize the key takeaways from today's presentation. 2025 demonstrated that Evotec can deliver with discipline closing the year at the high end of guidance through strong execution, cost control and CapEx discipline even in a challenging environment. At the same time, Horizon provides a clear and actionable path towards sustainable profitable growth through 2030 with structural optimization and a more focused operating model. As part of this transformation, we have strengthened our commercial organization and will accelerate execution under new leadership.

While the D&PD environment has remained challenging, the headwinds are actively managed and expected to fade. With improving market conditions, we see the basis for a recovery building into the second half of 2026. Taken together, we are actively transforming our business model towards higher quality, more capital-efficient growth with Just-Evotec Biologics playing an increasingly important role. These developments position Evotec to deliver profitable growth and sustainable value creation.

With this, I would like to open the call for your questions. Thank you.

[Operator Instructions] Our first question comes from Christian Ehmann, Berenberg.

I'll start with 3 and would like to get back into the queue. So first of all, I very much appreciate the 40% year-over-year growth figure for non-Sandoz, non-DoW business in the JEB segment. Could you give us a little bit more detail on the starting point in 2025? So how much of your revenues in the segment were from non-Sandoz, non-DoW sources?

The second one would be in regards to the future nature of the BMS. So I think in the past, it was mainly FTE rates and also revenues for working packages that had to be finished. Can we assume going forward that this will now shift to more of a royalty milestone-based remuneration plan?

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

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

So yes, you're correct, non-DoW, non-Sandoz revenue growing 40%. We would expect to see that by the end of '26 that the non-Sandoz, non-DoW revenue is about 50% of the overall Just business at this point in time. And that is a significant growth since 2024 when we were approximately 25%. And I believe in 2025, we're approximately 30%, to give you a little bit of a frame.

And I will hand over the third question to Cord, although Christian manage a bit the expectations typically, it should not be us talking about the intentions of the clinical assets of BMS, but maybe Cord can shed some light on that.

On the second topic, the whole program was always constructed in a way that at some point in time, there will be an increasing amount of milestones and ultimately also royalty payments through this collaboration. So yes, by design, you're right. Cord, is there anything you can add on the clinical plans?

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

Our next question comes from Charles Weston, RBC.

Mine are all a little bit more near-term focused specifically on 2026. First of all, you've indicated for the second half that you're expecting a market recovery. And I was just wondering if you could help give us some color in terms of your assumptions or your confidence around market recovery versus your own sort of self-help from your new commercial efforts.

Secondly, I wonder if I could ask for a bit of guidance on BMS for 2026. You've indicated that 2026 will be a trough and I think the number was EUR 139 million in 2025. So how much of a headwind ballpark could we expect in 2026 from BMS? And I guess the same question for [ brand of defense ].

And then just last one, please. For 2026 milestone payments, I think in March, you've got a $10 million payment from BMS. In your Horizon presentation, it looked like up to EUR 150 million could theoretically be payable this year. And you've said that you're expecting two more assets to move into Phase II this year. So how much milestone should we be thinking about in total for 2026?

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

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

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

Sorry. Yes. It's as a percentage.

Our next question comes from Swayampakula Ramakanth from H.C. Wainwright.

A couple of quick questions. One is on the Horizon implementation, with an expectation of 800 positions being cut and consolidation to 10 sites. Just trying to understand what could be the risk of customer disruption, especially from the talent loss? How are you managing some of the project continuity, especially with key partnerships like BMS.

And the second question is, post the Toulouse site sale, can you help us quantify the expected development revenues, milestones and the timing of the royalty stream from the 10 biosimilar molecules? And when could we expect the first biosimilar to reach the market?

Okay. All right. First topic, Horizon, you probably appreciate this was top of our minds and one of our most important criteria when we made decisions not to disrupt the business and particularly ensure that the customer relationships amongst the new partnerships will not be implemented -- will not be impacted.

As I mentioned in my speech, we don't think that there is any material risk. We've been around that time and since then in constant dialogue with our customers. And I can tell you at this point in time, there was also no negative feedback from the customer side. So it's all well appreciated. By the way, one of the feedbacks that most people were actually telling us, look, the whole market has gone through a similar exercise. So we're not the only player in the market who is resetting. So we handled it with a lot of care. We spent a lot of time in preparing this move. We know exactly what we're doing. We think this is a contained risk. Paul, on the Toulouse site?

Yes, I think the question was around timing of the royalty streams post the sale and post the transaction with Sandoz. To give a little bit more context and color on that one, so we would see a ramp-up of both new products and licenses and new products, I mean, cell culture media, cell lines and indeed licenses between now and 2028. So by 2028, that's in the range of around 10% of the Just revenue and growing.

And then beyond 2028 is when royalties kick in, and these are linked to the LOE dates of the drugs coming off patent that have been disclosed in our 9-month update, and I think on Sandoz' own update as well.

The next question comes from Brendan Smith TD Cowen.

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

Thanks, Brendan. AI and recognize maybe we have not been so vocal about that in the past, but it's an integral part of our drug discovery platforms. Cord in the Q3 call also explained that, for example, our BMS collaboration has extensively utilized those AI platforms. Moreover, it's not just pharma and biotech, Brendan, it's also the AI companies who make use of the services of Evotec. So we definitely see AI as an important tool in future when you look at toxicology, DMPK, ADME-Tox prediction, there's probably a view for the next 5, 6, 7, 8, maybe 10 years, there is a coexistence, which could even drive volume up. So we see that. We also hear that we not only see this from biopharma, but we also see it from AI companies coming to us. I hope that helps.

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

This is Mike Ryskin today. I want to follow up on a couple of earlier questions -- earlier comments you made in terms of D&PD in 2026. You talked about second half low single-digit growth and sort of what's supporting that in the market. I just want to clarify, is that -- are you seeing orders already? The orders you're seeing, is that already sufficient to justify that? Or are you assuming further order improvement? The comments you have made about orders in the second half of '25 being a little bit firmer. Is that -- do you expect that to continue? Sort of if you could expand a little bit on what's underpinning that, if that's more biotech or pharma and sort of where that's coming from?

And then a separate question is going to be on the pacing of Horizon going forward, looking at what you presented in Slide 11 in terms of that time line, site closures, workforce reductions taking off in 3Q, 4Q this year, whether there's any opportunity to move that up a little bit or accelerate that? Just sort of what are some of the constraints on that? You alluded to limitations of local law and things like that. Is that more tied to that or just the decisions haven't been made yet?

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

With regard to the D&PD business, second half, low single digit when you think about components of that, that's obviously the stand-alone business, the integrated business and strategic deals. We haven't seen a lot of traction on larger integrated deals that we expect, given that our funnel on strategic deals have significantly improved in the last couple of months that there will be an uptick also or a contribution -- a stronger contribution from new strategic deals.

The prospects that increased in 2025 have led to better sales order trajectory compared to mid of last year. But I think it's fair to say that it's going to be a mix between this plus the strategic deals that we see coming. Paul, anything you would like to add?

No. I think Christian articulated it well. And again, I just refer to the slide where we see that strategic D&PD partnerships coming in, in the second half and cautious on this low single-digit growth in the second half, but we'd see first half remaining challenging for the stand-alone business.

[Operator Instructions] Our next question is a follow-up question from Charles Weston, RBC.

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

Charles, we've got about 29, 30 companies left as of December 2025. We definitely believe that there are a couple of really interesting assets. As always, when you have a portfolio, some are more progressed, some are less advanced that we clearly see some of them on a very good path.

Now as you can imagine, those are digital events, right? Either you have a buyer, you don't have a buyer like what happened this week. It was fantastic. We do expect that there will be further opportunities in the future. But as I said, for us, this is upside. For us, this is a cash-generating upside going forward. So yes, our portfolio remains interesting. Yes, we believe that there is upside going forward. Quantifying it and timing it, don't ask me, please.

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

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

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Evotec SE Analyst and Investors Conference Call and Live Webcast. I am [ Moira ], the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Dr. Sarah Fakih, Head of Global Communications and Investor Relations. Please go ahead.

Thank you, Moira. Good morning, good afternoon, and welcome to today's webcast and conference call. My name is Sarah Fakih, and I'm the Head of Global Communications and Investor Relations at Evotec. Please allow me to introduce today's speakers. Joining me on the call are Dr. Christian Wojczewski, Chief Executive Officer of Evotec; Paul Hitchin, Chief Financial Officer of Evotec; and Aureie Dalbiez, our Chief People Officer.

Today's presentation will focus on the announcement we made earlier today regarding Horizon, the next phase in our multistage transformation initiative and the associated strategic and financial framework. Please note that this call is being webcast live and will be archived in the events calendar on our website.

Before we begin, a few forward-looking statements. The discussion and responses to your questions on this call reflect management's views as of today, Tuesday, March 10, 2026. During this call, we will make statements and provide responses that state our intentions, beliefs, expectations or projections regarding the future. These statements constitute forward-looking statements within the meaning of applicable securities laws. They are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied.

Evotec disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. For further information regarding these risks and uncertainties, please refer to our public filings and disclosures.

With this, let me hand over the call to Christian.

Thank you, Sarah. Good morning and good afternoon to everyone. Welcome, and thank you for joining today's call. Today marks an important milestone for Evotec as we introduce Horizon an operating model transformation and the next step in repositioning the company for sustainable growth and value creation.

With Horizon, we are upgrading Evotec in 3 crucial aspects: operational excellence, scientific leadership and commercial execution. The measures laid out today will result in greater agility, innovation and responsiveness to the evolving needs of our customers, thereby better positioning us for accelerated profitable growth through 2030. Horizon is the next step in the transformation journey. We started with a priority reset in '24 and continued throughout '25.

Let me remind you the restructuring already achieved has improved our resilience. We stabilized our cost base by delivering more than EUR 60 million in savings through the end of '25, well above our initially announced savings goal of EUR 40 million. Furthermore, we streamlined our asset pipeline by 30%, significantly reduced our capital expenditure by 60% and strengthened our balance sheet.

With that foundation in place, we are now entering the next phase in our evolution, moving to long-term value creation. Horizon positions Evotec for future growth based on 3 pillars: first, simplification of our operational structures into a smaller global footprint. By the end of 2017 (sic) [ 2027], we plan to have reduced the number of our sites from 19 originally to 10 sites.

Second, introducing focused centers of excellence to concentrate our scientific expertise and innovation infrastructure. Third, upgrading our commercial organization and elevating our commercial capabilities to become faster, more agile and more responsive to our customers.

Based on these pillars, we are targeting EUR 75 million run rate savings by the end of 2017 -- '27 sorry. The significant reduction in operational complexity is expected to allow us to be more capital efficient. Accordingly, we are targeting a continued CapEx lighter approach to below 10% of revenues. The goal of Horizon is straightforward to reset how the company operates, allocates capital and deliver science and innovation more competitively in the most attractive segments of the discovery and preclinical development market.

Horizon plays out against an industry backdrop that has itself undergone a post-pandemic reset as illustrated on this page. The exceptional funding and development activities seen during the pandemic area has normalized and early-stage biotech funding has tightened. Pharmaceutical companies are placing greater emphasis on return on R&D investment and execution reliability, adopting a more disciplined approach to capital deployment and innovation funding.

As a consequence, investments are currently directed more toward clinical stage derisk programs. Evotec's operating model has not kept pace with this market shift. Expansion through acquisitions and growth across multiple sites has created complexity and duplication. While this has led to underutilization and slower execution, our innovation capabilities remain strong and undisputed.

At the same time, it's important to recognize that a more disciplined market dynamic does not signal a decline in innovation. Rather, they reflect a more selective environment in which companies prioritize superior outcome at greater efficiency and at best value per R&D dollar. Such an environment favors external partners able to combine scientific depth with operational excellence and therefore, integrated platforms become more relevant.

Horizon rebalances our operations for the changing drug discovery and development environment and prepares Evotec to capitalize on its strengths as the industry continues to evolve. Those strengths are important to recognize because while the current environment is constrained, the structural fundamentals of our industry point to substantial opportunity. As shown on the left side of Slide 6, total pharmaceutical R&D activities is expected to provide stable moderate growth over the remainder of the decade.

Within current projections, we see factors that may stimulate over-proportional demand for discovery and preclinical development services. These include the largest patent cliff that the industry has faced in more than a decade. As these expirations approach, pharmaceutical companies will need to replenish pipelines efficiently and economically. This will drive renewed demand in the industry for high-quality early discovery and development work.

Furthermore, we believe drug discovery and preclinical development in 2030 will have evolved from what it was in 2024. Advances in automation, data science and AI are raising expectations and reshaping cost structures, and they create new opportunities for platforms that can integrate data, biology, disease modeling, automation and execution at scale.

For Evotec, this dynamic represents an excellent opportunity. We are positioned to meet this returning focus on innovation with significant strength. Deep scientific expertise, differentiated technology platforms and our proven ability to innovate across the discovery to R&D continuum. In summary, even though global R&D growth has moderated compared to the exceptional pandemic years, -- we expect greater selectivity and capital discipline rather than reduced innovation appetite.

As later-stage portfolios mature and commercial pressures increase, early discovery becomes increasingly essential for pipeline. Before we take a closer look at our transformation path, let me briefly remind you of the 4 levers of midterm value creation at the core of Evotec's strategy shown here on Slide 7.

These levers have guided our priorities since their introduction in 2025 and all 4 have directed our decision-making since then. Most relevant to Horizon in our presentation today are lever 1, our emphasis on above-market growth and better quality earnings through scientific and technology leadership; and lever 2, our commitment to operational excellence.

Now let me outline on Slide 8, the trajectory of our transformation. This slide shows that we have already completed a significant part of the journey and built a strong foundation from which Horizon will further evolve the company. In '24 and '25, we stabilized the company operationally and financially. We strengthened our leadership and governance and improved our science and innovation focus. Within these areas, we sharpened our strategy and defined clear value creation levers that guide the operating model we are now implementing under Horizon.

We reinforced financial discipline and embedded EUR 60 million in annualized cost savings. We prioritized and streamlined our asset pipeline, consolidated scientific leadership and improved AI integration. The work over the past years delivered what we previously had committed. Evotec is more focused, more disciplined and more resilient. Horizon now takes this progress forward. It is the next structured step building on our momentum and establishing a path to incentified value creation.

Beyond that, it lays the groundwork for optimizing the company and intelligently scaling into 2030 and beyond. Slide 9 summarizes our core measures across the 3 horizon pillars of operational excellence, scientific leadership and commercial execution. Within the operational excellence pillar, we are simplifying our structures through a footprint adjustment.

During '24 and '25, we reduced our global footprint from 19 to 14 sites. On the horizon, we will further streamline to 10 sites over the next 2 years. This will further expedite the transformation from a dispersed multisite structure to a focused network of technology hubs and centers of excellence, concentrating activities where we already have greatest scientific depth, infrastructure and strategic relevance for a broad range of technologies.

In the process, we will prioritize owned sites, lowering structural costs and increasing infrastructure utilization. The streamlined footprint anticipates reducing approximately 800 positions across affected locations and enabling functions. This step removes structural duplication, aligns capacity with expected demand and reinforces execution discipline across the company.

Within the scientific leadership pillar, we will establish centers of excellence, improving our scientific depth and partner readiness. Today, a number of key capabilities are spread across multiple sites, which limits their respective scale and dilutes impact. On the horizon, we will concentrate this first capabilities in dedicated locations with clear mandates and end-to-end accountability.

Within the commercial execution pillar, we are upgrading our customer-facing organization to strengthen responsiveness and improve the quality of engagement with customers and partners. Supported by the operating -- operational streamlining, we are expanding our commercial organization while introducing clear ownership of customer and partner relationships and a more integrated go-to-market approach.

Backed by a realigned business development organization, these improvements are designed to accelerate execution, enhance customer experience and ultimately increase our win rates on high-value mandates. The Horizon measures will proceed responsibly and in accordance with local law. Horizon is a defined time-bound realignment with a clear end state, and we plan to execute swiftly and only once. Importantly, we do not expect material disruption to ongoing customer and partner programs.

On Page 10, you see Evotec's global footprint in 2024. Before we began the first phase of our transformation journey with a priority reset. The 19 sites shown here, each with different technologies and specialty areas reflect the history of growth through acquisitions and geographic expansion. That growth enabled scale in the past, but over time, it left us with fragmented and less focused on our core strength.

The multisite setup also fostered siloed working, duplicated capabilities and slowed decision-making. Thereby limiting agility and driving organization complexity and cost. In today's environment of continuous change and intense cost pressure, this fragmentation is no longer viable. To remain competitive and preserve our ability to invest in innovation, we will execute on clear efficiency measures to concentrate competencies, simplify structures and unlock synergies.

The map on this Page 11 illustrates Evotec's future global footprint. It reflects a much simpler, more focused operating model with clear technology area ownership, a centralized innovation infrastructure that concentrates expertise at sites where Evotec already has significant scientific mass and operational leverage. This will allow us to scope more competitively for customer programs, supporting a more resilient backlog and a healthier revenue mix.

The concentration of capabilities following the footprint adjustment will primarily strengthen our fully integrated sites into Toulouse and Verona. These sites house all core disciplines in discovery and preclinical development. So we place core scientific areas in a multidisciplinary infrastructure that supports cross-functional problem solving, expert-to-expert interactions, simpler governance and use of shared technology platforms and data models.

Thereby enables a seamless progression of customer projects from concept to candidate. Importantly, in the case of Toulouse and Verona, Evotec owns both facilities. Further strengthening these sites avoids lease costs, increases utilization of our existing fixed cost infrastructure and reduces operating expenses while preserving flexibility for future expansion.

Taken together, these changes allow us to focus much more effectively and capitalize on our core scientific strength. They enable us to serve our markets with greater agility, deliver faster translation of science and better utilization of people, platforms and capital. The new operating model and global setup strengthens our commercial execution, enabling more customer mandates, higher win rates and better cross-sell across platforms, while keeping on-time delivery and first-time-right execution at the core of customer value.

Let me now hand over to Paul.

Thank you, Christian, and a warm welcome from my side. In the final part of today's presentation, I would like to take you through the financial implications of Horizon and how this translates into our new medium-term framework. To give you a clearer view of where we stand today and how we are guiding for the years ahead, I'll walk you through 4 connected building blocks.

First, preliminary unaudited results for the full year of 2025. Second, our guidance for full year 2026, which we consider a transition year during which Horizon is implemented and begins to take effect. Third, the financial mechanics of Horizon itself, how the measures and the operating model transformation translate into savings, cost and timing. And finally, I will introduce our new midterm framework through to 2030, which reflects a phased trajectory aligned with the implementation time lines of Horizon.

Let me start with the preliminary unaudited full year 2025 figures shown here on Slide 12. These numbers form the financial baseline for the 2026 transition year. While they remain subject to completion of our year-end closing and audit procedures, they provide a reliable basis for guiding 2026 and framing our midterm outlook. For full year 2025, we expect results to fall within previously communicated guidance ranges. Group revenues are expected to amount to approximately EUR 788 million with adjusted group EBITDA of EUR 41 million or EUR 811 million and EUR 52 million, respectively, at constant exchange rates.

Our year ending cash position also finished strongly at approximately EUR 476 million. Looking into our 2 business segments, starting with the D&PD segment, our preliminary unaudited full year results reflect the continued softness in the early drug discovery and preclinical development market that we saw in the first 9 months of '25 results. We expect D&PD revenue to amount to approximately EUR 529 million, representing a year-on-year decline of approximately 13%.

Adjusted EBITDA is expected to amount to approximately minus EUR 12 million. At constant exchange rates, revenues are expected to be at EUR 540 million and adjusted EBITDA at minus EUR 5 million, respectively. The key drivers were sector-wide, reflecting lower funding availability for early-stage biotech companies and delayed program starts.

In addition, revenues contracted faster than our cost base, which created internal overcapacity and weighed on segment profitability, further underscoring the need for Horizon's operational reset. In contrast, the Just-Evotec Biologics business continued on a strong path in 2025. Preliminary unaudited revenues are expected to amount to approximately EUR 259 million, representing a year-on-year growth of approximately 40%.

Our fourth quarter Just-Evotec Biologics results also included an additional license fee benefit of approximately EUR 65 million. Adjusted EBITDA contribution from our Just business is expected to be -- to total approximately EUR 53 million for the year. At constant exchange rates, the Just-Evotec business revenues landed at EUR 271 million and adjusted EBITDA of EUR 57 million.

Just-Evotec's evolution toward an asset-lighter technology enablement model is progressing by growing a growing contribution from license fees, stable development revenues, milestone potential and future royalties. This is complemented by platform components that increase biologics productivity, such as our proprietary cell line, media and expression vector systems, which can provide us with further opportunities to generate revenues.

The Sandoz agreement provides clear validation of our continuous manufacturing technology and illustrates how we are shifting from a capacity-constrained setup towards a scalable, higher-margin technology-driven partnerships, including licensing where appropriate.

Moving on from our full year 2025 baseline, let me walk you through the financial mechanics of Horizon and our 2026 guidance on Slide 13. Starting with the impact of Horizon. As Christian outlined, Horizon is the continuation of a multistage journey in which we have already delivered on many improvements. We enter 2026 implementation year with approximately EUR 60 million of annualized cost savings from 2025 already embedded in our operating cost base.

From a financial perspective, Horizon will realign our cost structure, focusing resources more sharply and creating a more scalable operating model. We expect total run rate savings of approximately EUR 75 million by the end of 2027, reflecting the structural benefits from footprint optimization, workforce adjustment and organizational simplification. To implement Horizon, we expect cash restructuring costs of approximately EUR 100 million over the 2026 to 2028 period with additional non-cash components related to asset impairments from site closures and moves.

Putting this together, the 2024 to 2025 cost savings stabilized our cost base. Horizon now delivers the next structural efficiency layer. Improved utilization then drives operating leverage, and this creates a clear bridge to margin expansion from 2027 onwards. With this context in mind, let me turn to our full year 2026 guidance. For 2026, we guide toward group revenues of approximately EUR 700 million to EUR 780 million at incurred foreign exchange rates and EUR 730 million to EUR 810 million at constant foreign exchange rates.

Adjusted group EBITDA is expected to fall within the range of approximately EUR 0 million to EUR 40 million at incurred foreign exchange rates and EUR 10 million to EUR 50 million at constant exchange rates. As I mentioned earlier, we consider the 2026 a transition year. Horizon measures will be phased in over the course of the year, shaped by optimization and restructuring effects initiated in the first half. Operational improvements are expected to become increasingly visible in the second half of 2026 as the benefits of Horizon begin to accrue.

A more detailed breakdown, including segment level granularity will be provided as part of our final full year reporting on April 8, 2026. In light of our multistage transformation journey, we have revisited our mid-range guidance to now reflect a phased trajectory from 2026 to 2030. The new framework aligns the timing of the Horizon measures with expected development of the revenue mix across our 2 business segments.

Under the framework shown on Slide 14, we expect group revenues to grow to more than EUR 1 billion by 2030. We continue to expect adjusted EBITDA margin to reach the 20% levels by 2028 and to exceed that level by 2030. This margin progression is driven by several reinforcing elements, both external and internal. Externally, we first anticipate a recovery in early-stage drug discovery and development activity in 2026 as innovation cycles normalize and pipeline replenishment needs increase across the industry.

Internally, 4 reinforcing elements support our financial progression. First, recurring cost reductions from Horizon, beginning in 2026 and with a full run rate effect from 2027. Second, a continued shift towards higher-margin technology-enabled and capital-efficient revenue streams, particularly within the Just-Evotec Biologics business.

Third, lower ongoing CapEx needs to a target of below 10% of revenues. And fourth, operating leverage as revenue growth resumes following the 2026 transition year, further fueled by improved productivity and automation. Importantly, the progression from 2026 through to 2030 is not dependent upon a single driver, just as the horizon is not simply a cost-out program. It is the combination of a lower structural cost base, a higher-quality business mix, normalizing utilization and gradually improving market backdrop that together create the path to the margin expansion.

Taken as a whole, we see this as a disciplined and credible trajectory in which 2026 represents execution and transition. 2027 marks the inflection of both market and internal improvements and 2028 and beyond reflects structural margin delivery.

With this, let me hand the call back to Christian.

Thank you, Paul, and thank you all again for joining this presentation. Before we now turn to your questions on Slide 15, I would like to take a moment to summarize Horizon's key aspects and how they position Evotec for sustainable midterm growth. As I said earlier, the market for discovery and preclinical development has had several difficult years in the wake of the pandemic.

At Evotec, we began the process to adjust to this new environment about 2 years ago. From the beginning of that process through the end of 2025, we delivered EUR 60 million in savings, streamlined our asset pipeline and significantly reduced our capital expenditure by 60%, strengthening our resilience. Those measures have enabled us to take the next step in our transformation, which is Horizon. From today forward, Evotec will be better positioned with a smaller footprint, streamlined operations, more focused science organization and more robust commercial performance to leverage our long-standing strength.

Together, the 3 pillars around operations, science and commercial execution on the basis of our new operating model, designed for agility, scientific leadership and sustainable growth. Evotec's well-established strength, our scientific excellence is central to this. Horizon is ultimately about creating an infrastructure that gives us work the greatest possible impact in a market that emphasizes innovation readiness, data-driven workflows and AI-enabled discovery.

As Paul said a moment ago, we expect you will beginning to see the first effects of Horizon towards the end of this year with its impact building over time. Meeting these targets will require continuing progress as Evotec adjusts to the changing market, adopts AI workflows and other new technologies and contributes its own innovation to the drug discovery and development enterprise. This is a process that is already well underway and will only gain momentum as the effects of Horizon begin to be felt.

With this, I would like to open the call for your questions. Thank you.

[Operator Instructions] The first question comes from the line of Charles Weston from RBC.

The first is just on the cost savings. I just wanted to better understand the trajectory of those through to 2028. First of all, what's the annualization impact this year of cost savings made in 2025? Secondly, what do you think the full year impact of Horizon cost savings will be in 2026 and 2027 because I wasn't sure whether you'd see the full impact in '27 or by the end of 2027. I'll pause there.

Charles, this is Paul, and let me start with that one. So first of all, in terms of the cost savings associated with priority reset, -- you'll remember that we targeted EUR 40 million of cost savings over '24 and '25. We actually delivered over EUR 60 million associated with that in 2025 as a program. As it pertains to the next program, this program of Horizon, EUR 75 million is the target run rate of 2027. In terms of the phasing of that, you should think around 20%, 25% of that in '26, the majority then in '27 and then some level of carryover into 2028.

Sorry, to be very clear, the EUR 75 million is expected in 2027 in the full year accounts -- or sorry, by the end of 2027, i.e., to be fully booked in '28?

The majority will be realized within the 2027 financial statements.

Okay. And then secondly, if I can, sorry, I appreciate that was several parts of question one. But on question 2, in terms of the expectations for 2026, could you comment on how much you have included in the guidance for milestones? And secondly, another key driver is obviously BMS, which fell significantly in '25 from 2024. So could you help us understand what trajectory you now expect for 2026 and I guess, beyond relative to those 2024 levels?

Thanks, Charles. This is Christian, and thanks for the question. I'll answer briefly and then remind everyone that this is also a call about Horizon. So happy to talk about the actions we're taking there. We still have an earnings call on the 8th of April. But with regards to BMS, you're right, 2025, 2024, as we said last time, was a decline. We expect 2026 to be kind of the trough in terms of sales and profitability for the partnership and then basically as of 2027 to pick up again. The second topic was around...

I think it was around milestones modeling them for 2026.

And as you also know, we're not necessarily singling them out in our reports, but it's fair to say that we're expecting a higher contribution in 2026 compared to 2025.

The next question comes from the line of Ramakanth Swayampakula from H.C. Wainwright.

So just as you talk through Horizon, and just -- and as you characterize 2026 to be the transition year for Horizon. So what's the total estimated cash outlay for the 800 job cuts and site consolidations -- and how should we think about that being phased across the 2026 EPS guidance that you've provided?

Yes. This is Paul. I'll take that. So we have about EUR 100 million planned cash costs associated with the plan. In terms of phasing, I would expect about half of that to be realized in 2026. And then the majority of the remainder in 2027 with some potential small tail into early 2028, but gives you a rough direction of travel for how that EUR 100 million charge looks like from a cash perspective.

Okay. And then in terms of the commercial execution upgrade, so one of your pillars is mentioned clearer ownership in the commercial organization. So I'm trying to understand how you're planning to execute and achieve this. Does this mean you will start hiring some senior commercial leadership for -- from the traditional large-cap pharma? And how will that sales cycle change as you move from basic service contracts that you have to like licensing out IP?

Thanks for the question. And to say that it's probably one of the most important pillars, and we have already started. So what I was alluding to is already in full motion and has a couple of levers. Yes, you're right. We are also upgrading our organization and our leadership team. Actually, while we speak, we have already brought people on board, more to come. And we are also expanding our business development team.

But beyond that, it's a more focused approach for salespeople, business development people for the individual opportunities that we have, one being stand-alone an integrated business, so more the essential classical CRO versus a dedicated team for strategic business development for the larger partnerships. So this has already been built and that will allow us to be much more targeted going forward. But beyond that, we are also significantly improving our commercial execution capabilities. We're bringing down the sales cycles. We're improving the conversion rates.

We are -- actually, we already have implemented a step change in our proposal management to bring the times down request for proposal to submitted proposal, our value propositions. What we do see already now is that the number of prospects are going up. We do see that our sales intake has stabilized over the last couple of months. And we also have quite some positive momentum on new strategic deals. So we start to feel the impact of the actions that we've taken earlier.

Fantastic. One last question. I know I'm taking too much of your time, but one last question. So your other lever or lever 1 emphasizes technological leadership. So just to understand this, so to what extent are you using the AI and machine language or machine learning capabilities? And how is that helping you -- or first of all, is it one of the important pieces to allow you to reduce the headcount? And if so, how are you managing not slowing down the development time line?

So when we talk about AI, we obviously have to differentiate between using AI for internal processes and becoming more efficient. I guess your question is more about using it in the context of drug discovery and development. I would like to maybe make 3 statements around that. Number one, we do believe that AI will play an important and increasing role in the future for drug discovery. and development, and it will be an important role.

Secondly, we, in all confidence, can say that it will not take over. It will be a tool which you need next to a lot of other tools in order to accelerate drug discovery and development. As always, it is important to generate good data and then you need obviously, software machines and so forth in order to navigate through the data, but it does not work without wet lab experiments and owning data.

And thirdly, what I want to say is -- and I know we talk less about that, but we already have AI implemented in many of our activities when it comes to drug discovery and development. It's actually live. It's part of our strategic partnerships. Some of the larger ones have greatly benefited from our ability not just to generate mass data, but also to do patent recognition and navigate through the data supported by our own AI tools. So it's going to be important. It's not going to take over, but will be a tool in the tool set that you need. And finally, it's already live at Evotec.

The next question is a follow-up question from Fynn Scherzler from Deutsche Bank.

I have two. So first, can you maybe help us a bit with 2026 and the moving parts between the 2 segments. So if I understood you correctly, it sounds like we might see D&PD returning to growth. So this, in turn, would then mean JEB is declining. Is this correct? And then connected to that, the EUR 75 million in cost savings, is it fair to assume that this is mostly in D&PD? So this would be the first part.

And then sort of connected to that, it's about the 20% adjusted EBITDA margin target for '28. So as I see it, you stand probably at less than 3% in '26. I understand the EUR 75 million run rate savings are probably quite tangible. But frankly, for me, it's still difficult to get to the steep ramp to 2028. So what gives you confidence and visibility here? Is it to a good degree, also the JEB profitability coming up from the Sandoz deal? Or how should we think about the sort of building blocks in between the 2 segments?

Maybe I'll quickly start and Paul chip in, please. Yes, you're right. We do assume a slight growth in D&PD this year. And with regard to JEB, I think Paul was alluding to the effects related to the Sandoz deal in 2025. Maybe you want to add a few comments later. The EUR 75 million cost savings are predominantly D&PD and SG&A cost. So if you add central and SG&A costs, then, you're right. Now with regard to the midterm 20% EBITDA.

Going back to the 4 levers we talked about, number one, growth in D&PD; number two, operational excellence/cost; number three, the rebuilding of -- just towards an asset-lighter model; and number four, our asset pipeline and the milestone and royalties that we expect from that. I think it's fair to say 2, 3 and 4 on track, if not even ahead of track. But we talked about the asset pipeline and the progress we have made in the last call already. This has very good traction.

You've seen the Sandoz deal end of last year, which basically was a fast-track execution of our strategy for -- just -- we're now talking about operational excellence and cost out. Initially in our plan to get to 20% EBITDA margin by 2028, we said we're targeting EUR 50 million. We're topping it up to EUR 75 million. So it's fair to say 2, 3 and 4 are on track, if not ahead. And that gives us a lot of confidence. With regard to the first one, I just explained how Horizon is going to impact our ability to drive growth. And we do see some traction here. And that's why if you put all in a nutshell, we actually feel very confident that the 20% EBITDA by '28 is achievable. Paul, anything to add, please?

Yes, first of all, let me start by saying we'll be providing some more color in the April earnings update on the building blocks for '26 and full year '25. Focus today was more on the Horizon program. But just in terms of the building blocks to think about right now for the 2 segments. So when you think about the D&PD segment, we expect to see low single-digit revenue growth in 2026. The Horizon program that you referred to -- that we've referred to today and you commented seems to be weighted towards D&PD. That is correct. So a greater contribution of Horizon into the D&PD segment is what you should think about. When you think about the Just business, just on a year-over-year perspective is impacted by the non-repeat of the 4Q license deal that we did with Sandoz.

So I mentioned earlier about EUR 65 million in the fourth quarter. That said, account of that is a part of the sale, we also divested the Toulouse facility that will give us a lift from an EBITDA standpoint as that cost comes out of the business. And then we -- then the remainder is the underlying growth of the business. What I would say as well, as you look at the revenue numbers, you clearly see the FX headwind that we see on the top line on a year-over-year basis that falls through to double-digit millions into our EBITDA outlook. But hopefully, that gives you a little bit more color, but happy to go through more details in the April update.

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

This is Jacqueline on for Brendan. Just one question. Could you dive a little deeper into where you see the most potential for improving the monetization of the JEB segment in terms of pricing, licensing, capacity strategy, et cetera? And then are there any specific technical areas that you're targeting within D&PD for upgrade? And are there any metrics that you'd want to point out that we could keep an eye on to kind of translate that improvement?

So on the first one, we already mentioned that we've been licensing so far the technology. But for us, technology is actually far broader than just a continuous manufacturing process technology. The -- Just technology comes with cell lines, proprietary cell line technology. It comes with our own media. It comes with expression vectors that have all developed and optimized over years to work in an optimum with a continuous manufacturing process. So when you think about licensing, obviously, you can also think about licensing compartments of that, i.e., cell lines, media and so forth. That's one. The second question, I think you need to repeat it. I'm not sure I fully got the question. Sorry.

Yes. No worries. I was just wondering like are there any specific areas? I know you're looking to integrate automation, but are there any specific platform technologies that you're looking to target to upgrade? And then just the small follow-up was what kind of benchmarks or KPIs are you looking to improve in terms of efficiency and productivity?

Okay. So with regard to platforms, we are actually constantly upgrading, be it in high throughput screening, be it in more the biology and disease area. We as you probably will remember, we have a large molecular patient database, which we constantly upgrade and make available to new indications. So this is something that we continuously do as part of our work. And I don't want to single out one specifically here today. But what we're doing on a constant basis is we are scanning the market. We are looking where differentiation and technology plays a more important role, talking about ADCs, for example, bispecifics and so forth. And then we make a decision where to prioritize our investments. So this is an ongoing process at Evotec.

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

So my first one is on the improved win rate that you talked about. Can you give us any KPIs around that? So what is the current win rate? And what are you expecting it to get to? Secondly, I wanted to ask, did you say that you are assuming market recovery, some market recovery in 2026 in D&PD? And could you just perhaps touch on the evidence around that? I'll pause there.

Yes. So Charles, thanks for the question. You may recall with regard to a number of prospects -- that number went up over the course of the second half 2025 by around about 20%, and I can confirm that this trend has continued. So obviously, prospects then need to be converted into sales. And I also mentioned that we've seen a stabilization versus what we believe was a trough in the first half 2025. We're going to speak more about that in the earnings call, April 8. With regard to market recovery, D&PD, we do expect that the market is stabilizing and is actually starting to recover in the second half of 2026.

Okay. And if I could just follow up on one other thing that you mentioned. You talked about intense price competition. I mean we knew there have been price competition. But is there any perhaps flavor of that you can give us a little bit more color around that specific areas, if it's the low-touch or high-touch service areas and whether it's sort of Asian lower-cost competitors coming in?

That's particularly in areas of -- yes, whether you call it low touch or areas that are more basic CRO offerings essentials where there is already a high degree of standardization. I would like to particularly single out basic synthetic chemistry for small molecules. This is an area that has, over the last couple of years, seen a clearer trend towards commoditization.

By the way, also an area that we are targeting here to improve our footprint optimization. When it comes to the high-end businesses in particular, the strategic opportunities where we're tapping into IP, be it our Omics platform or be it the molecular patient database, then usually, we do not see price competition or price pressure because that's pretty distinct and unique offerings we are putting together and bundling for our partners. So those conversations are more centered around creating exciting outputs rather than negotiations about prices.

The next question comes from the line of Charles Wallace from H.C. Wainwright.

So I guess, looking at the Horizon, outside of -- and specifically in the JEB business, outside of the Sandoz transaction with the revenue commitments, I believe, over $300 million through 2028, where do you see -- or how much growth do you expect in the business ex Sandoz...

Yes. Charles, I can take that. So we saw substantial growth year-over-year on the non-Sandoz DOW parts of the business. So full year growth, I'll talk a little bit more about it in April, but we expect we will see full year strong growth year-over-year on that strong double-digit growth in our non-Sandoz, non-DOW business. And then when we look forward to 2026, frankly, we continue to see that non-Sandoz, non-DOW growth continuing.

The -- and that's more than offsetting -- obviously, you may have read about the DOW changes right now, but that will be more than offsetting some of the budgetary constraints that we see coming from DOW. So we continue to see the strong growth year-over-year in the new and growing part of the business. But we'll provide more color on that in April.

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

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

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Evotec SE Quarterly Statement 9M 2025 Conference Call. I'm Lorenzo, the Chorus Call operator. [Operator Instructions]

At this time, it's my pleasure to hand over to Volker Braun, Head of IR and ESG.

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

But now let me hand over to our CEO, Dr. Christian Wojczewski. Christian, please.

Thank you, Volker. Good morning and good afternoon to everyone. It's a pleasure to welcome you all to this call. I'm looking forward to taking you through the progress we've made over the past 6 months of transition since the announcement of our new strategy.

Very pleased with the momentum and high speed of our transformation towards better monetizing our technology leadership. The steps we've taken in the past couple of quarters are a strong fundament for our value creation path and for the execution of our mid-term outlook. I'm confident that this will become more visible to you while we lead you through this presentation.

Let us now take a closer look at the year-to-date performance. In the first 9 months, Group revenues landed at EUR 535.1 million, which is a 7% decline versus the previous year. This is driven by our D&PD business, where we faced continued softness in the early drug discovery market, leading to 12% revenue decline.

In contrast, our Biologics business, JEB, remains on a strong growth path with plus 11% growth in the first 9 months. As mentioned in the last call, we expect the trend in D&PD to continue in the second half of 2025, while for Just-Evotec Biologics, we anticipate revenue growth to further accelerate. Taking a closer look into the D&PD business, we see several main elements driving past and future performance.

Talking about the early drug discovery market environment, the VC funding for biotech is certainly not yet favorable, affecting the business development activities of the transactional service business. However, over the last 2 quarters, the number and value of proposals going out from Evotec to customers is clearly trending upward, indicating that the business is stabilizing. Also, the level of negative change order volumes in Q3 has substantially improved versus first 2 quarters.

In the meanwhile, we have taken appropriate actions to adjust our cost base. We've introduced a new organization structure, and we're strengthening our commercial and operational capabilities. 12 months ago, we were targeting EUR 30 million of cost out in 2025. We raised the bar over the course of the year. And during the last call, we committed to EUR 60 million of cost out, and we will stay ahead of plan.

As announced last call, we are working on delivering additional EUR 50 million of cost out and productivity measures in the future. You should expect a full update on the initiatives we're working on during our next call. The business momentum with strategic partnerships remains healthy, ensuring continued mid-term revenue streams. Those strategic partnerships are expected to also result in meaningful progression of our asset portfolio over the next 6 to 9 months.

Several catalysts lie ahead of us, leading to the transition of molecules from the early drug discovery stage into preclinical and from preclinical into clinic. And I'm pleased to announce today that we're expecting up to 4 molecules from our partnered asset pipeline to be in Phase II clinical studies in 2026. This is exciting news for Evotec as it demonstrates the scientific strength and the outstanding capability of our technology. And it underpins our plan to generate meaningful upside to milestone and royalty payments in the future. More about this a bit later.

At Just-Evotec Biologics, we're making great progress in our efforts to diversify and broaden our customer portfolio. Business development within non-Sandoz and non-DoD business is moving fast. The momentum for this part of the business has further accelerated versus half year results to now over 100% growth after 9 months.

Moreover, we signed a transformational deal between Just-Evotec Biologics and Sandoz just hours ago. This landmark transaction is a strong testament to our cutting-edge technology and capabilities in the fast-growing biologics business. It will unlock payments of more than $650 million over the next years.

In addition, we expect to generate sizable revenues from royalty streams related to 10 biosimilars. We're extremely excited and proud to have been selected as partner by Sandoz on their path to shaping the biosimilars market. In a nutshell, we are well on track with our strategy, driving both scientific and operational excellence.

Since the VC funding for biotech customers is relevant for approximately 30% to 40% of our revenue base in D&PD, let me share some further background information about the market trend. Updated data on total venture capital funding environment shows no material change compared to the analysis we shared in August. The absolute funding level has not grown over the past 2 quarters. The share related to discovery and preclinical stage companies remains well below pre-pandemic levels, suggesting a continuing short-term investment focus on companies with clinical stage assets.

We spoke about the temporary deprioritization of early discovery and development activities and funding. It needs to be overcome before we see forceful recovery of the early drug discovery market. That said, we do see some encouraging developments. Negative change orders are normalizing and customer activities are increasing.

In the first half of 2025, the balance between positive and negative change orders was impacted by higher than expected cancellation volume, contributing to a weaker sales performance in D&PD. This effect was related to a small number of contracts, which were canceled by customers either for strategic or scientific reasons. In Q3, we're back to normal levels.

The development of our change order balance is shown in the upper graph. In contrast to the comparably low funding activities for early-stage biotech, the business activity level at Evotec has picked up. The number of proposals issued to our customers has grown 20% over the past 2 quarters, and this is also in line with the growth in total value of proposals.

Even though those early indicators are promising, we are not yet indicating a change of trend. We remain vigilant in monitoring market developments and continue to adopt to our customers' evolving needs in a more agile way. In parallel, we are building a more targeted go-to-market approach. And as mentioned last time, we are strengthening our commercial organization.

I'd like to now hand over to Paul, who will guide you through our financial results.

Thank you, Christian, and a warm welcome from my side. Let me guide you through our year-to-date results in a little more detail. Our first 9 months Group revenues reached EUR 535 million, a 7% decline versus the same period in 2024 and is aligned with our expectations.

Firstly, our D&PD revenues declined by 12% to EUR 391.9 million in a persisting soft market in early drug discovery, as Christian commented on in his introduction. Also, as mentioned last time, included in this result is the expected temporary decline in the BMS revenues.

Our Just-Evotec Biologics business continues to grow strongly in the first 9 months of the year and is on track for a very strong 2025. For the first 9 months of 2025, revenues reached EUR 143.2 million, which is up 11% versus the first half of 2024.

As we mentioned last time, we continue to see a broadening of our customer base with non-Sandoz and non-DoD customers growing 105% in the first 9 months versus last year. During the first 9 months of 2025, our Sandoz business grew low-single-digits. Although as we look forward, we expect meaningful full year growth following the completion of the recently announced transaction, which will include multiyear consideration for technology access, development revenues and product royalties.

Our R&D spending remains on the trajectory shared last time and is reduced by 33% versus prior year period from EUR 41.1 million in the first 9 months of 2024 to EUR 27.7 million in the first 9 months of 2025 as we direct our investments to those most relevant for our partners.

Adjusted Group EBITDA reached negative EUR 16.9 million, driven by the weaker than expected D&PD revenues and our fixed cost base. We are well on track with our cost-out initiatives to deliver the EUR 60 million of in-year structural cost reduction in 2025 that we communicated in our last call.

We also remain focused on delivering the additional mid-term cost and productivity actions that we discussed in our April update. Our Just-Evotec Biologics business remains ahead of expectations, helped by positive operating leverage despite the planned J.POD build-out.

Bridging to our full year outlook, we expect our fourth quarter profile to reflect the higher revenue contribution weighting that we have seen in prior years. In addition, our recent guidance update in July reflected lower full year D&PD revenues with an overall improved business mix, including the effects of the events announced last night.

Now continuing with cash flow. Our year-to-date free cash flow has improved by 14% versus the same period last year. This is despite our third quarter operating cash flow having a tough comparable to last year when we received $125 million of BMS payments, whilst the recently announced BMS neuro payments has only been received in the fourth quarter of this year.

However, in line with our expectations, our investing cash flow continued to see sequential improvements as we drive more rigor in our CapEx investment processes whilst also completing the J.POD build-out.

Our net debt levels grew versus the second quarter of 2025, which also reflected the higher lease obligations following the adoption of a long-term lease agreement in our Hamburg facility. Following the completion of our transaction with Sandoz planned in the fourth quarter of this year, we expect our liquidity to be in a significantly stronger position with the residual long-term debt portfolio.

With that, I hand over to Cord.

Thank you, Paul, and good morning and good afternoon to everybody on the call also from my side. As you know, at Evotec, we strive for technology and science leadership on our mission to pioneer drug discovery and development. Our ambition is to accelerate the journey from concept to cure in partnership with our customers.

Today, we are pleased to talk about considerable achievements we have made along this strategy in both segments. Let me start with a look at the D&PD segment first. We are seeing great scientific progress with our strategic partnerships. Based on these achievements, we continue to feed and expand our strategic partnerships and are confident that our common asset pipeline will show substantial progress not only in 2025, but also during the next 6 to 9 months.

So what is our approach? Christian already mentioned that we offer end-to-end discovery services, including development and also highly innovative drug discovery technology platforms. We strive to combine both offerings to create superior customer value.

Our core service offering spans the entire value chain from target identification to IND. When we combine those individual services, we can seamlessly run integrated research projects using highly automated workflows. This train of services, shown in blue on this chart, is the backbone of our operations.

Within our strategic partnerships, we are then adding proprietary AI-enabled technology platforms on top of this. These are shown here in pink. These platforms elevate our drug discovery platforms to the next level.

Our AI-driven platforms are targeting, in particular, 4 goals. We create a much deeper understanding of disease biology, and therefore, patient stratification through our proprietary molecular patient database. We improve our target ID and validation efforts as well as hit identification through superior in vitro disease models driven by our iPSC platform.

We enhance and accelerate hit to lead and lead up processes through in silico profiling and an eye supported molecular design. We reduce the risk of failures due to industry-leading tox and safety predictive tools. So this means that AI for us is not a stand-alone feature. We have embedded AI deeply into our toolbox, enhancing the performance of each and every platform in the value chain. Based on this, we not only shorten time lines, but we also improve outcomes.

Let me briefly take you through the individual elements. Our proprietary molecular patient database consists not only of highest quality and comprehensive clinical data, but also of deep multi-omics data based on corresponding patient samples. This database is invaluable when it comes to target ID and validation and is supported by AI machine learning algorithms.

Our E.INVENT platform is a highly comprehensive suite of AI machine learning supported molecular design tools, predicting everything from solubility, ADME-tox parameters, affinities to targets, but most importantly, it supports our -- it accelerates our molecular design cycles.

Our AE safety platform is a suite of NAMs consisting of gold standard in vitro models, which are combining with high content omics and/or high content imaging data to predict the safety and tox profiles of drug candidates. We are doing this with extremely high accuracies, and I will come to this in more detail later.

Furthermore, we have an extremely versatile iPSC drug screening platform, which in combination with omics and high-content imaging data is able to profile disease relevance as well as efficacy and safety of drug candidates throughout the drug discovery process with higher granularity, and therefore, higher accuracy than standard in vitro models.

All of these platforms are underpinned by our seamless high-performance omics platforms, which can generate, in particular, transcriptome, proteome and metabolome data at highest quality and with unmatched throughput. I will come to the details here later as well.

Finally, we are able to bring all of these data together in our data analysis tool called PanHunter. This tool facilitates the handling and the analysis of high-dimensional data sets and is in many areas, AI machine learning supported.

On the next page, I will show you selected examples of significant scientific achievements in 2025 and also talk about how they translate into commercial results with our strategic partners. And thereafter, I will show you how those partnerships are associated with highly attractive long-term financial upside.

But let me take you through a few selected highlights. I have mentioned the importance of our Evotec molecular patient database as a foundation for a better understanding of disease processes, and therefore, also target ID and validation. And in 2025, we have significantly expanded the database through the addition of new cohorts, in particular, in kidney diseases, obesity, but also immunological diseases. This database continues to support strategic partnerships, while also generating multimillion dollar success-based payments.

As far as our iPSC drug discovery platform is concerned, we continue to upgrade our disease models into more complex organoid-type in vitro models. We have done this particularly successful in the kidney disease space. We continue to also make progress in our AI-supported small molecule design platform, E.INVENT. Here, we continue to build models that support specifically the design of certain compound classes as we believe that there are no one-size-fits-all models that are suitable for every compound class.

We mentioned previously that we continue to invest in new approach methodologies, NAMs, to predict safety and toxicology of drug candidates. Also, here, we continue to make very significant progress by continuously improving our existing models, while also adding further models. For example, our drug-induced liver injury tox prediction tool continues to improve as now we have reached a predictive accuracy of more than 90%.

Similarly, we have developed a highly predictive cardiotox prediction tool, which also has a predictive accuracy of about 90% A further example is a new model of a -- in a teratogenicity prediction tool, where we are currently approaching 80% of predictive accuracy. To our knowledge, these omics and image-based AI-supported safety tox prediction tools are absolutely industry-leading when it comes to their predictive accuracies.

Finally, I would like to briefly talk about scientific progress in our PanOmics platform. Our high-performance PanOmics platform continues to evolve. In 2025, we reached 2 landmark achievements. With our high-throughput transcriptomics platform called ScreenSeq, we conducted a high-throughput compound screen, screening over 250,000 compounds using transcriptomics as the primary read-out. To our knowledge, this is an industry first and has never been done before.

Similarly, we keep improving our proteomics platform. We have improved efficiency, automation and throughput of our platform significantly and expect to profile over 100,000 compounds in 2026 using proteomics as the primary read-out. To our knowledge, there is no other company generating as many proteomic compound profiles in the industry or processing as many samples using proteomics.

So it is great to see that we continue to make this much progress on our AI-supported proprietary platform. Just as important is, however, that these platforms continue to support the business financially. The combined order value to these -- directly tied to these AI-powered platforms is currently north of $200 million already.

Beyond this, it is important to keep in mind that these platforms are not only supporting the business through research payments, they enable us to build strategic partnerships, which fuel our partnered asset pipeline with very substantial financial upside. And this is shown in more detail on the next slide.

Today, Evotec has a pipeline of more than 100 projects. Over 60% of these projects are part of strategic partnership, and therefore, fully supported by these. All of the more advanced assets, in particular, those in clinical and preclinical stages are supported by partnerships, and therefore, represent pure financial upside for Evotec.

Collectively, this portfolio represents a non-risk-adjusted value of over EUR 16 billion just in milestones. In 2025, the pipeline progressed significantly, which means that the total milestone potential of more than EUR 16 billion as well as significant royalties is becoming increasingly tangible. Accumulated returns up to 2028 could total on the order of EUR 500 million.

In April, we gave you a status update on our asset portfolio. At that time, in total, we had 12 projects of our 100 projects were beyond the discovery stages, 6 of these were in preclinical stages and 6 in clinical Phase I. In 2025, 2 assets have progressed from Phase I to Phase II of clinical development.

Furthermore, we expect that 1 asset will move from the preclinic into the clinic. And moreover, we anticipate further progress over the course of the next 6 to 9 months with 2 further molecules expected to move to clinical Phase II. This means that there's a high likelihood that our asset pipeline will have in total 4 molecules in clinical Phase II, each of them with a different partner in different indication areas.

Overall, we are clearly pleased with a lot of progress on multiple fronts. First of all, we have very significant scientific progress on AI-supported platforms. We have been able to show very significant progress in our clinical and preclinical portfolio of assets with 2 new assets in Phase II and additional assets expected to come to the clinic soon. And finally, our discovery stage pipeline also continues to expand and is expected to continue to fuel our preclinical stage portfolio going forward. So a lot more exciting news to come here within the next 6 to 9 months.

This is where I hand over and back to Christian.

Thank you, Cord. Let us now switch gears from monetizing technology leadership in D&PD over to doing the same for Just-Evotec Biologics. As you will have noted, last night, we announced a successful signing of the sale of the Just-Evotec Biologics' Toulouse site to Sandoz.

Under this transaction, Sandoz will acquire Just-Evotec Biologics EU plus a technology license to our continuous manufacturing platform. The agreement includes additional license fees and development revenues. This marks a pivotal milestone in the journey of Just-Evotec Biologics and underscores the successful execution of our strategy. We aim to close the transaction together in 2025, subject to meeting customary closing conditions, including foreign direct investment clearance by the French authorities.

With the transaction, we are reconfiguring our successful partnership with Sandoz which started back in 2023 with the intent to support the expansion of Sandoz biosimilars pipeline and was extended in July last year. We are now converting a collaboration that was based on a long-term manufacturing arrangement into a new partnership centered around technology transfer and enabling our partners.

The rationale for the deal is clear and compelling and it follows the strategy we outlined for the whole company. Number one, we will focus on our core competencies. This is making business by leveraging our technology leadership. Our intent is not to run a fleet of manufacturing sites as a classic CDMO player.

Number two, we're entering a new episode of growth. Our commercial approach will pivot towards an asset-lighter, higher-margin business model, one that leverages best our technology, scales to partnerships, avoids the need for large upfront capacity investments and delivers superior returns.

Number three, we remain fully equipped to serve all our customers through our center of excellence in Redmond and Seattle. Operationally, we have no limitations to support the growth plans of our partners.

Number four, this deal is financially highly attractive for Evotec as it provides us with short, medium and long-term economic benefits.

On this page, you see a summary of the financial parameters of the deal. We've agreed on an initial consideration of about $350 million for the site transfer and upfront technology license payments, which will be effective short-term. Over the mid-term, Evotec has the potential to generate revenues from licenses and development services plus milestones of over $300 million. Those payments are related to enabling our partner to manufacture biosimilars.

In the time period thereafter and starting with commercial success, Evotec is eligible to royalty payments for up to 10 molecules. These 3 phases, starting with a handover, create sustained cash flows over an extended period. At the same time, we improve our revenue mix, reduce CapEx intensity and unlock high-margin IP and technology streams.

As part of the deal, up to 10 molecules developed with the Evotec continuous manufacturing technology are eligible for royalties. As recently published by Sandoz, the Evotec partnered molecules in development are targeting a fairly large share of the originator biologics market. For example, the 6 most advanced molecules address a combined net sales of approximately $92 billion. Another 4 molecules are currently not disclosed.

Looking ahead to the future of Just-Evotec Biologics beyond our great collaboration with Sandoz. Our U.S. operations will remain a center of excellence for biologics discovery, process development and manufacturing. The hub of innovation fully aligned with our mission to discover, develop and deliver the next generation of medicines faster, smarter and more sustainably.

Given the strong momentum of our U.S. business with over 50 ongoing customer projects, we've expanded P&PD in Redmond and are contemplating further expansion in manufacturing selectively. Going forward, we will provide additional commercial routes for our customers to use our proprietary technology.

With the transaction announced last night, we've validated the value of the technology, and we've demonstrated the IP licensing model for our continuous manufacturing platform is a very attractive path for our partners. We're now adding further optionality, including licensing of our cell lines, perfusion media and the launch pad concept to enable alternative manufacturing platforms via our J.POD design. In very simple terms, our job is to drive the innovation forward and to enable our partners to successfully launch and manufacture biologics products.

Just-Evotec Biologics has 4 main compelling modules to offer on this page in blue, J.HAL for molecule discovery; J.MD, our machine learning-enabled molecular development technology; JP3 for complex biologics process development; and the J.POD for continuous manufacturing. Until now, we have deployed this technology as part of an overall plan to manufacture biologics.

This would have required Evotec to continue to invest in the expansion of our manufacturing footprint. The transformation towards the next-generation CDMO model allows us to now deploy the technology without having to make those investments. All components are already in place, such as J.CHO, J.MEDIA, J.TRAIN and J.POD, here in pink.

The performance of our proprietary cells and cell culture media customized for the perfusion-based continuous manufacturing process is industry-leading. Today, we are only using them for in-house development. For tomorrow, we see the potential to leverage these assets along a product commercialization path.

On the path to enable our customers, there are multiple options to ramp up manufacturing capacity using our technology without us directly investing, such as integrating a J.TRAIN into a customer's facility or providing turnkey solutions at the customers' premises.

Over to guidance and outlook. Our mid-term outlook shared in April is based on the ambition to better leverage technology and science leadership, the foundation of our strategy. It is therefore encouraging to see that the endorsement of an important customer of Just-Evotec Biologics, such as Sandoz, translates into tangible results only a few months later. Furthermore, our asset portfolio in D&PD has substantially progressed.

The visibility towards our mid-term goals has improved substantially. You heard the detailed financial analysis from Paul earlier. Hence, I keep it short here on this page. Despite the headwinds in the early drug discovery market, we have full confidence and confirm our guidance for 2025 with a targeted revenue of EUR 760 million to EUR 800 million and an expected adjusted EBITDA in the range of EUR 30 million to EUR 50 million.

We also see Evotec on track to reach its mid-term outlook at 8% to 12% top line growth and EBITDA margins greater than 20%. With the actions in place, we gained visibility and increased confidence in delivering our EBITDA margin.

Let me conclude by making reference to what we discussed on 17th of April this year with you. Only half a year later, we see 3 out of 4 levers of our mid-term value creation unfolding their impacts. While it is too early to call the challenges in the D&PD market mastered, we see green shoots and continue to prepare our organization to be more competitive in this environment. Our cost-out program is ahead of plan. We fast track the execution of our new strategy at Just-Evotec Biologics and the asset pipeline is progressing well.

For now, I would like to say thank you. We're now happy to answer your questions. Back to Lorenzo.

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

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

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

Yes, please. If that's okay.

I will hand this over to Paul.

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

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

Yes. When I -- just to give a little bit more color on the full year bridge. So first of all on the D&PD segment, just to reiterate what we said last time, we see similar trajectory on full year revenues for D&PD. We do see some potential mix improvements from milestones as we get into the fourth quarter.

On the Just-Evotec Biologics side of the business, again, a couple of things. Continued outperformance and operating leverage as we go into the end of the year. Some impact of lower cost base in Toulouse, depending upon the completion timing once approvals are met. And we believe there's a license recognition element from Sandoz.

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

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

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

Yes. Charles, let me go. So on the mid-term outlook, you said we announced 10% to 12% revenue CAGR growing with EBITDA margin to 20% by 2028. Following the transaction and also the events that occurred so far this year in the D&PD business, I would say the revenue CAGR is on the lower end of that revenue range. However, we do see stronger potential on the EBITDA margin rate versus our initial assumptions.

As it pertains to milestones, obviously, as you know, those are quite lumpy in both sides of the business, whether it's on D&PD or the Just-Evotec Biologics business. When you think about the transaction with Sandoz that we disclosed, where there are -- there is consideration between 2026 and 2028, what you should think about is around 2/3 of that is product development type activity and about 1/3 is licenses and milestones, which are subject to certain criteria. So it gives you a little bit of flavor of what that may look like over that period of time over the next 3 years.

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

Actually, I really appreciate all the color on the AI capabilities internally. So I actually wanted to ask just a bit more about this. And really, I guess, to what extent the NAMs capabilities actually come up in your conversations with partners and customers thus far this year? If you've seen any material shift in that kind of tone?

I mean, we get a lot of questions about whether pharma is kind of increasing investments in AI internally on their side is impacting their engagement with external partners offering those kinds of capabilities. So just wondering if you're seeing any demonstrable shift in where they're engaging on that side of things or if NAMs offerings are actually increasing that? I mean, how you might expect that to kind of help grow revenues over the next, let's say, 12 to 18 months?

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

So the NAMs are definitely getting more attention and also from the pharma side, particularly. Nevertheless, it's still sort of a muted growth in the area at this point in time. But we do see real signs of acceleration because people -- a lot of projects are integrating these NAMs at an earlier stage.

You can imagine if you sort of have a predictive tool for drug-induced liver injury, if you introduce this late in the process, you essentially have to profile a handful of compounds maybe. But if you introduce it early in the process, you are continuously profiling potentially hundreds of compounds.

And here, this is why we keep talking about industrialization of these platforms and making them high throughput feasible because this sort of opens up the funnel to really bring this into the -- on the critical path of the drug discovery value chain and incorporating these kind of assays at an earlier stage. So basically, right after hit finding, essentially, you can start incorporating this.

So I think with this sort of seeing that people are getting more and more interested in incorporating these NAMs early, I would expect to see the revenues vastly accelerate on this front. If it's within the next 6 months, I would say that would be very ambitious. But within the next 12 to 24 months, certainly.

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

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

Thanks, Fynn, for the question. Obviously, our visibility at this point in time is not all the way through 2026. And keep in mind, collectively, the industry since quite a bit was actually looking at when exactly the tipping point is happening. So I'm a bit cautious with making statements about when exactly the market is coming back.

And as I said earlier, when you look at the individual bits and pieces here, you've seen on one slide, the change order pattern that wasn't favorable in the first and second quarter, the negative change orders, but it was also related to a few individual wins. Q3 looks much better than you've seen the number of prospects going out, right, plus 20%. You can draw conclusions out of that, but I'm not doing it at this point in time because these prospects need to convert into sales orders.

So at this point in time, given that we have probably visibility into the next couple of months, I would not make a statement around plus 5% for the market next year.

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

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

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

Yes. Fynn, this is Paul again. When you look at the year-to-date profile of the D&PD business and then compare it to third quarter, you're correct that it appears to take a step down. We did actually in the first half have better mix and then also a license benefit in the first half that impacted positively. It didn't repeat in the third quarter.

As I said in my comments, however, we do see further opportunities around milestones for the fourth quarter for D&PD. And that volatility, if you like, on milestone recognition will continue in this segment. But that explains the delta there.

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

I think a couple of points here. First of all, I tried to explain that there is the Sandoz deal, and that's a fantastic opportunity to partner with Sandoz, and it will continue to generate revenues and profit for the company. Then there is another 50 customer projects that we are serving out of the U.S. Don't forget to keep that in consideration.

And then what we said is we're basically pivoting to a different model, right? So the way that we look at it is a much more capital-effective way of doing business. So moving from a manufacturing view to a license model allows us to generate revenues in our view, at a higher margin rate and much more capital efficient. And that's the driver why we've concluded that this is a great deal for the company. And as we said also last time from an NPV perspective, for us, this is a positive contribution.

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

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

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

So I think there's still uncertainty in the market, especially in biotech, and I've also mentioned that our D&PD business, 30% to 40% of the revenue is related to biotech. So there's quite some exposure here. That's number one.

Number two, as we also mentioned throughout the course of the year, while conversations continue, there's more slicing happening than what we've seen in the past. So more cautious spending, less larger projects, more smaller projects and decision-making is slower.

So that's a little bit the environment that I have -- the picture I've painted already in Q1 and in Q2. And we see this continuing with maybe the difference that, as I said, the number of prospects have come up quite a bit over the course of the last month and quarters, which shows that there is more activity and hopefully also more prospects for 2026.

Pricing, obviously, is a function of also capacity in the market. It's clear that there has been overcapacity across the market in drug discovery, but it's also clear that most players are right now adjusting like we're doing it. So I see this actually also starting to normalize when demand and capacity is coming more into balance again.

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

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

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

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