"Q3 was an important quarter during which we conducted our first clinical study and showed a third consecutive quarter of strong operating performance in our services business," commented said Joern Aldag, President and Chief Executive Officer of Evotec.
Evotec's Pharmaceuticals Division recently submitted one compound into clinical trials with its first clinical proof-of-principle study for EVT 201, a novel potential treatment for insomnia.
The study provided promising results with respect to a good balance between the duration of promotion of sleep and subject alertness the following morning.
Evotec's strong third quarter performance was attributed an acceleration in sales in Evotec Technologies and strong sales in its Services Division.
Additionally, the company's Services Division posted a nine month revenue increase of 14 per cent to €43.2 million compared to 2004's figure of €38.0 million. Q3 revenue growth amounted to 6 per cent year-on-year.
Evotec's target discovery collaboration with Takeda continues to go from strength to strength reported revenues of €1.1 million (2004: €0.9 million) for the first nine months of 2005,
"We ramped up our external efforts for target validation in context of our collaboration with Takeda as we move closer to the time frame in which Takeda may select targets for their internal discovery programmes. Margins are therefore expected to come back to average levels in the fourth quarter of 2005," said Evotec.
Evotec admitted in the last quarter that the company's performance reflected a general trend towards a recovery in the drug discovery marketplace, particularly in the US and Japan, with Europe following behind 'at some distance.'
"Although market conditions remain challenging, we expect the enhanced deal flow to translate into stronger sales over the remainder of the year, with higher capacity utilisation helping to improve gross margins," said Aldag at the time.
Evotec's Tools and Technologies Division's (Evotec Technologies (ET)) posted third-party revenues for the nine months of €8.9 million - a jump of 5 per cent on 2004's figure.
R&D expenditure increased as planned, by 40 per cent year-on-year. It was the first quarter in 2005 that Evotec Neurosciences was fully consolidated for the entire period, and R&D expenses in our Pharmaceuticals Division have started to pick-up with the first clinical study conducted for EVT 201.
By adding €1.7 million in Q3, divisional R&D expenses increased to €2.1 million (2004: €0.9 million) for the first nine months.
The overall decline of group R&D expenses year to date is therefore mainly a result of significantly reduced R&D in its Services Division.
As our fully integrated platform requires a lower level of investment going forward, R&D expenses in the division decreased by 51 per cent to €2.7 million (2004: €5.5 million).