Market climate blamed for Evotec Q1 losses
in part, to what it said was a difficult operating environment for
companies supplying drug discovery technologies.
As a result of revenue decline and a negative currency impact on gross profit Evotec's operating loss for Q1 2004 increased by 22 per cent to €7.1 million. Evotec's cash, cash equivalents and marketable securities at the end of the first quarter amounted to €16.3 million.
Net loss also increased to €6.2 million from €5.0 million, due to the decline in operating result and research activities. These include payments of €1.0 million to DeveloGen - a biology-driven drug discovery company which Evotec has entered into a joint drug discovery and development partnership in the field of obesity and diabetes.
The loss was positively impacted by tax income increasing to EUR 1.6 million due to the new UK tax regime. Net income per share increased slightly to €0.17 from €0.14.
Evotec revenues for the first quarter of 2004 were reduced by 19 percent to €14.4 million. This poor performance was attributed to a number of factors. For example, Evotec said Q1 sales in the previous year included approximately €3 million revenues from the delivery of an EVOscreen Mark III system to Pfizer.
In addition, the strong Euro affected sales recognised in US dollars. At constant 2003 currencies, revenues in Q1 2004 would have been €0.8 million higher, according to Evotec.
There was more lacklustre news in Evotec's Discovery and Development Services Division. This posted revenues down 10 per cent to €11.1 million, while sales at the Tools and Technologies Division were €3.6 million, down 20 per cent.
However, the Discovery Programs Division brought in €0.9 million, from no revenues last year, as a result of an agreement Evotec Neurosciences signed with Takeda in August 2003 to research and develop drugs to treat Alzheimer's disease.
Despite the results, Evotec is confident of a full recovery by the end of the year. Indications that pharma companies are increasing their outsourcing activities, reversing an 18-month negative trend. Recent financings of biotech companies in the private and public equity markets, particularly in the US, indicated improving overall health in the sector.
This view ties in with the raft of US laboratory equipment and consumables companies reporting results for the first quarter of 2004 last week, which provided convincing evidence that demand for these products has returned among the pharmaceutical and biotechnology industries.
