initiation of coverage EVOTEC BUY – EUR22TP | The CRO with biotech upside

EVOTEC initiation of coverage BUY – EUR22TP | The CRO with biotech upside

We believe Evotec is in a unique position in the biotech ecosystem, leveraging a profitable CRO business to build one of the more exciting and expansive pipelines in the industry. In recent years, Evotec increased investment in state-of-the-art drug screening and development platforms on the back of multi-omics data capabilities (panHunter and panOmics) and industrialized iPSC-based disease model screening. These platforms are largely being monetized in partnerships, rather than typical fee-for-service work. We view the recent BMS deal on molecular glue degraders ($200m upfront, up to $5bn and tiered royalties) as validation of the potential of Evotec’s next-gen platforms. We initiate coverage with a BUY and €22 PT / $10.50 for ADRs.
Outsourced biopharma R&D activities are an important part of overall R&D spending

Evotec is a leading pre-clinical CRO player with biotech upside potential

We believe worries of rising costs and tightening biotech budgets are overblown

We initiate coverage with a BUY and €22 / $10.5 for ADRs