Dear, ladies and gentlemen, welcome to the Q3 Report Conference Call of Evotec AG. At our customer’s request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. (Operator instructions) I now hand you over to Werner Lanthaler, CEO; and Colin Bond, CFO who will lead you through this conference. Gentlemen, the floor is yours.

Welcome from Hamburg, this is Evotec management team on our nine months 2014 interim report. When you work in a biotech company, you often see a lot of light but you’ll sometimes also see true shadows of our industry. I think it’s fair to start by saying that during the year of 2014 we have seen a lot of good events of the company but Q3 was clearly also an event where we have to say that not all the things that we wanted to go right went the right direction, and we’ve also seen one clear shadow of this industry that we have to highlight in this report, namely, the situation around Diapep277. But let me step back first. Overall, it’s my big pleasure to report that the company is in a strong situation. When we look at our operational performance, the company is doing very well. When we look at our EBITDA situation, we have a positive EBITDA to report. And overall, we see a strong cash position which makes us strategically very well positioned for the challenges to come. When we look at our financials, our Group revenues amounted to €58.9 million which is slightly below 2013 but this excludes basically milestones which we had in 2013 in our books which are not in our books in 2014 so far. Overall, we see a strong growth above 5% on our base [ph] business. Our positive adjusted EBITDA of €0.3 million for the Group showed that Evotec execute, deliver and can compensate for our future investment that we carry at this stage in Evotec Innovate. We have impaired all of Diapep277 because it’s unlikely that we see a product royalty ever coming from this project at this stage. Having said that, we have, as already pointed out, a…

Slide 23, as Werner previously mentioned, Group revenues decreased by 2% compared to the same period in the prior year to €58.9 million. This decrease was the result of significantly lower milestone contributions in the first nine months of 2014 compared to the same period of the previous year when large milestone contributions of €7.5 million were received from Boehringer Ingelheim. However, excluding milestones upfront and license, Evotec’s revenues for the first nine months of 2014 rose by 5% and were actually up 7% compared to the same period in the previous year at constant 2013 foreign exchange rates. Overall gross margin for the first nine months of 2014 decreased to 28.3% compared to 35.8% for the first nine months of 2013, clearly as a result of the aforementioned reduction in milestones. However, at 2013 exchange rates, the gross margin would have been 30.3%. In the first nine months of 2014, Evotec recorded an impairment of intangible assets in the amount of €8.7 million resulting from the announcement by Hyperion that it had terminated the further development of Diapep277. In addition, the termination of Diapep277 resulted in a fair value adjustment of €6 million as a result of the reduction in earnout liability to former DeveloGen shareholders. For the first nine months of 2014, EBITDA adjusted for changes in consideration was positive €300,000 compared to prior year of €5.9 million as a result of the lower milestones. Slide 24 shows the results for the first nine months of 2014 presented according to the Execute and Innovate segments. Consistent with our strategy, the results of the Execute segment for 2014 show strong revenues, solid margins, lower R&D investment and relatively high profitability with EBITDA adjusted for changes in contingent consideration for the first nine months of 2014 of €9.8 million despite…

Maybe if I can add one sentence to the R&D guidance. We can already guide here that we will definitely be on the upper end of what we intend to spend on Cure X and Target X initiatives because we see this helps to execute on our innovation strategy which is also the summary of our key milestones that we expect for 2014 in where you see that despite of the fact that there were some not-so-positive situations in Q3, a lot of things have been achieved and there is a lot of positive moment in the company of things that we will achieve going forward. I would like to invite you for a Q&A session now and just let me round up by one organizatorial [ph] announcement first, that going forward in 2015, our conference calls for the discussion of our quarterly reports will no longer be held in the morning of the day when we publish but that it will be held in the after of the day when we publish in order to give our American investors the chance not to always only listen to the playbacks of that but also to be live on that call and to have a better situation to interact in Q&A situations with us. Thank you for your understanding of that. With this, I would first of all thank you for following the company and also being with us when things go right and when things sometimes not go the right direction. And secondly, we look forward to all your questions now.

(Operator instructions) We have a first question from Igor Kim from Close Brothers. Igor Kim – Close Brothers Seydler Research AG: Yes, hello everyone. I have a couple of questions. The first one is you expect a significant milestones in the last quarter of this year, so they are not considered in your outlook which there is a high single-digit growth for revenue, just would you clarify. And the second question is, are you eligible for any milestones payments from Jensen for the Phase II trial initiation in insomnia? And perhaps the last question is, given the devaluation of euro with respect to U.S. dollar, what do you expect what kind of effect it might have on your base business margin in the last quarter? So these are the three questions so far. Thank you.

So, question number one, yes, that’s correct. So we always guide, execute business without milestones on high single-digit growth. Second one on JingXin, that is a deal which is relatively back-loaded structured. Remember, this was a project which basically failed in western countries so we hedge to motivation someone to restart the whole development which we now see in China progressing, so we will not achieve milestones or receive milestones upon the purely clinical trials but we will achieve milestones upon Phase III trials and upon market approvals; and then a very significant royalty on this one. And on the situation that we currently see our major income in U.S. dollars, our major cost base in euros and in British pounds, I’d like to handover to Colin.

Yes, Igor, obviously we’ve got about 60% of our revenues now in dollars in the first nine months of 2014. And the strengthening of the dollar is a positive impact on us. We expect in Q4 that could be up to €800,000; €900,000 positive impact on our gross margin or about 1.2 percentage points. Igor Kim – Close Brothers Seydler Research AG: Okay, very good. And perhaps one follow up. I recently read that there was in some articles that Harvard have pioneered a new technique to grow insulin-secreting beta cells, I think, it was directed by Doug Melton, so the question is, have you been involved somehow in that and that – or does it affect your CureBeta program? Thank you.

So, what published by Doug was of course something that we are aware of and have been aware of for a very long time. This project is as it looks right now more targeted towards cell therapy in diabetes. So that would be a question for us if we want to, addition it [ph] to what we are doing, also invest our money into cell therapy for diabetes. I think all I can say at this stage is that we are in the best of all possible context with Doug Melton. We are working very closely on, at this stage, three projects with Doug; three other projects with other investigators from Harvard, so that’s a very fruitful and productive collaboration and I think also Harvard would see it and describe it that way. How we will ultimately go about cell therapy in diabetes is at this stage not decided. Igor Kim – Close Brothers Seydler Research AG: Okay. Thank you.

Thank you. (Operator instructions) We have a next question from Heinz Müller, DZ Bank Heinz Müller – DZ Bank AG: Yes, good morning. Heinz Müller speaking. I have a question. Perhaps you can give us an indication what’s the probability you’re assuming to receive the open receivable against Andromeda.

I think we took a very prudent step on this one first but to give you a financial answer first, probably, I’ll handover to Colin.

Yes, just to put it in perspective, the total milestone that we recorded in 2012 was €3.9 million. We received €500,000 of that in cash from Andromeda and we’ve made a provision of about €1.5 million against the – including the provision that we’ve now taken in Q3 so there’s about €2 million that we still have on the balance sheet. And the reason that we’ve kept that there is that based on our legal advice and we believe that we have a strong claim in order to recover that money, so we’ve received or provided for about 50% of the total amount.

And just to give you a bit more color on this, as already mentioned, we have prepared all legal action to secure shareholder value for Evotec out of this unpleasant case. We are in a very good dialog with Hyperion on this one. As it seems, Hyperion is in discussion and has extended this discussion for a potential settlement of the situation with the former owners of Andromeda called Clal Biotech. Will this go fast? I doubt it. Will this be a very clear case? I also doubt it. I think the decision that we have made is that we focus on the future and not on the past. And therefore, we will do everything which is legally necessary but from a situation that we see commercially here, we have to really bring this to bed [ph] and say it goes in the dimension of €2.5 million now. That’s it and if we’ll ever get it or not, that should be decided by some court if there’s not a settlement before that. Heinz Müller – DZ Bank AG: Okay. Thank you.

Thank you. The next question is from Thomas Schießle with Frankfurt. Thomas Schießle – getinsight Research GmbH: Yes, hello. Good morning gentlemen. This is Thomas Schießle of Frankfurt speaking. Two questions if I may. One on a specific project, EVT070 diabetes with Boehringer Ingelheim, there might be some popping [ph] and discussion in terms of a discussion with Boehringer Ingelheim, the prospect of the project, could you give us some additional insight? And the second question is on anti-infective. You stated, Werner that you would like to increase the activities in the indication of anti-infectives, will that lead to extra investments in infrastructure and capacities especially if it comes to the extra security you have to provide if it comes to handling anti-infective agents. Thank you.

Thank you so much. First of all, on the anti-infective situation, the reason why we acquired Euprotec in Manchester was mainly the fact that Euprotec has a long standing and long offering into the future defined arrangement with the University of Manchester for all their animal facilities, which is – and the audience might not know this – one of the best animal facilities in Europe when it comes to anti-infective models and these are also facilities where you’re able to basically go for all species in anti-infective models. And of course, this is equipped with the safety standards that you can imagine. So therefore we, on top of getting access to the platforms of Euprotec and on top of getting access to the talent and people of Euprotec, we’ve got access to this contract which was related to Euprotec and dealers [ph] you have mentioned. So this is the situation where we don’t have to use additional Evotec CapEx for this. But where we can benefit from the investments that the British government and the European Union has made it to Manchester for this facility. On EVT770, we have at this stage a situation with Boehringer Ingelheim for this project that the project is under evaluation where it will – and that actually it sounds for me a bit defensive, we think we would not be unhappy if the project falls back to us. That’s how it’s contractually defined. Strategically, it’s unlikely that Boehringer Ingelheim will push this forward into the clinic in diabetes, but this is a target where we would be very happy to see if there wouldn’t be other priorities that we can pursue with this target going forward. The situation at this stage is under evaluation and we’ll report back in the first quarter of 2015. Thomas Schießle – getinsight Research GmbH: Okay. And if the project will fall back, you have to write it down because my experience [ph] won’t be materialized in the future.

Yes, if it falls back, then clearly, technically it’s a triggering event and we will be required to update our impairment model and consider what value we keep it on our books at the end of Q4. Thomas Schießle – getinsight Research GmbH: Okay. Will that trigger a future amount and material amount or if it’s [indiscernible]?

It really depends on what the evaluation model tells us and what the future use of the asset is. We think there could be quite attractive future use of the asset. Thomas Schießle – getinsight Research GmbH: Okay. Thank you, gentlemen.

Thank you. The next question is from Mick Cooper, Edison. Hello, your line is now open.

Mick, where are you? Mick Cooper – Edison Investment Research: Can you hear me now?

Yes. Mick Cooper – Edison Investment Research: Sorry about that. [Indiscernible]. On second comb [ph] that you said about taking the target program X initiatives for the latest stages, later value infection points, does that mean that we should be expecting deals coming up or that it literally should – it’s not going to happen until the end of next year? And how to decide which infection point to take moving forward? And then just a quick question with EVT100. Should we expect that program to go next year? Thank you.

So when it comes to – I think it’s fair to say that all of our Target X and Cure X initiatives have a separate individualized lives. And with this individualized business plan, every target basically represent its own business plan, its own attractiveness in the medical field whether access in the efforts also represent a different potential deal making scenario behind the target. I think I don’t have to explain to you the overall situation there. But as a general principle, the optimal danger point that we with our platform and our resources can achieve, it’s always going to the point of PDC because that’s where we optimally use existing platforms on the [indiscernible] to come to the situation and potentially then partner a project with pharma companies, yes? So that’s the principle behind it. As you have seen in the past, we have done deals that were significantly earlier than going to PDC and of course, we will also continue to do that when we see that the commercial situation is highly attractive. For example, in the field of kidney disease, a deal with AstraZeneca where costs are taken by AstraZeneca, the targets are progressed forward. And we have a huge [indiscernible] and role to cascade as an upside there. And all costs are covered by AstraZeneca. And it would have been an effort which would have been too broad for us within our bandwidth to carry that forward. When I think about CureBeta, that was the same situation there. So I think we are not against making earlier than PDC deals, not at all, yes. But as a principle, you should understand that the thing that’s best possible value infection point could be the PDC, that’s one aspect. The second aspect, there are areas that are too…

Thank you. We have a further question from Thomas Schießle. Thomas Schießle – getinsight Research GmbH: Yes, thanks. Thomas Schießle once again. Question on the U.S. market and the prospects when it comes to your Execute business. Biotech industry in the U.S. is blossoming up. The financial situation is improving. What about U.S. activities to profit from this early August improved situation in the U.S. biotech industry so far?

As you see in our financial trend and you will continue to see this in Q4 2014, Q1, Q2 2015 because we already have significant visibility on our order book into 2015 is that yes, we are one of the profiteers of the biotech renaissance of the U.S. East Coast especially. We also are a profiteer at this stage by I would say a trend which goes back to [indiscernible] innovation efficiency project. So when it comes to who is the high quality discovery part now for early biotechs in the U.S. and in Europe, Evotec has achieved a top place in the discovery space. And as you have also seen the consolidation wave in our industries is continuing and therefore we are very happy with this spot that we have achieved in the last three to five years within our discovery industry. So, and for number one, yes, we are profiteers of the U.S. rising [ph] environment of biotech and pharma. Second part of the answer, restructuring and strategic insecurity within pharma and R&D continues. So what is on the one hand side positively effective from biotech is still a timeline get to the [indiscernible] and a strategic insecurity within discovery of pharma. And number three, I would say we don’t see a problem and it only depends to European or U.S. situation in the same time zone when [indiscernible]. So it’s perfectly feasible to build an East Coast to Europe bridge which we are doing [indiscernible] I think for us, it is a prudent strategy to build capacity at this stage in Europe and to serve the U.S. market. What we increasingly – [Audio Gap] – do in the U.S. company and we extend our business development capacities there. You will see us also putting more scientific stuff on ground for early scouting and early I would say discovery development with our partners there. But I think we are very happy with the bridge that we built between Europe and United States at this stage and will continue to do so. We don’t need India at this stage. Thomas Schießle – getinsight Research GmbH: And to bridge the six hours’ time different that is okay with your clients at the East Coast so far and there is not a question whether they would like to see more closer to the things you will they are – you will develop – develop or has done together.

First of all, it’s only five hours’ time different to the U.K., so that’s also helpful. And secondly, we really don’t see this as a big issue to our Europe capacity at this stage. And you see we are growing capacities in Hamburg, we are growing capacities in Munich, we are growing capacities in Oxford. So we wouldn’t do this if there wouldn’t be there market demand. Could we do more if we would be physically also more present in United States? Potentially. But I think again, here the bridge between European resources and the United States at this stage is a very good mix for us. And don’t underestimate, we really think that Europe should see a comeback also in the discovery space. Because in what other industries should the European Union catch up, it’s not in biotech. Thomas Schießle – getinsight Research GmbH: Okay. And the [indiscernible] you would take us given.

So we really has the worst combination in the last 12 months. So we had a strong pound in a weak dollar. And we’ve had to endure like everyone in Europe a weak dollar for a considerable period of time. With the dollar now strengthening, that, as I said previously, that gives us a significant advantage. We think about €800,000 to €900,000 on our margins just in Q4 as I said and the overall impact on our 2014 margin, the full year will be about 1.2% as I said. But on a quarterly basis, Q4 margin could be up 3% to 4% as a result of the dollar strengthening now. Thomas Schießle – getinsight Research GmbH: Thank you, gentlemen.

Thank you. The next question is from Mark Pospisilik, Kempen & Co. Mark Pospisilik – Kempen & Co: Hello, good morning, gentlemen. Thanks. Just one question from me. On the relative profitability of the Execute and Innovate activities now and the trajectory going forward, how should we be thinking sort of next year or two? Will the loss from one more or less match the profitability from the others or will we start to see a catch up and acceleration of the Innovate as soon as next year? Thanks.

I think for the time being, I would assume the same levels. We are at this stage updating our Innovate strategy, which we will do until the end of the year and also then we put back at the beginning of the year. I think it’s a bit too early to give is a sign up call on that if you wouldn’t mind. We see that for optimal value creation, we have definitely started the right strategy here – what is the concrete focus area, what is the concrete number of projects, how do we exactly expand that, I think if you wouldn’t mind giving us a few weeks’ time then that would be very nice. What you should appreciate is the Execute margin that you see at this stage basically has very low milestones in there. And I think that makes us very comfortable that our base business so to say, which is unfair because it’s a highly innovative type form [ph] business that we are running here. Going forward, we should not see any significant margin [indiscernible] downwards probably we would also see better margins. And so therefore, we are very comfortable with I would say flexibility that this type form gives us and that’s what we will build into the model. Mark Pospisilik – Kempen & Co: Great, thanks. We look forward to further updates. Thanks.

Thank you.

Thank you. The final question is from Igor Kim, Close Brothers. Igor Kim – Close Brothers Seydler Research AG: Thank you for taking one follow up. Talking about the overall market environment, there was recently acquisition of Covance by LabCorp, I think they are involved in early drug discovery business. So what’s your assessment regarding the changing competitive [indiscernible] comment on this briefly. Thank you.

First of all, Covance is clearly involved in the drug discovery business. They have initiated to build a discovery business which is similar to ours in the chemistry space, in the assay [ph] development space, also in the early targets identification space over the last I would say five to seven years. The acquisition from LabCorp, I don’t know what was the real strategic trigger for it. It just shows you that size matter when it comes to outsourcing organizations to pharma because that’s what Medcorp basically does. It’s an outsourcing service provider to pharma in its widest scope. You also clearly have seen the acquisition of BioFocus by Charles River by the beginning of 2014. You also have seen that Chinese and Indian players has increased the pace of consolidating of the U.S. facilities together. So I think it’s something where we feel very comfortable with the position that we have achieved as the quality leader in the discovery segment. And being the quality leader in our core segment is always the right strategy to go. What happens left and right from us is a consolidation we cannot influence. But what is key to us is providing the best quality to our customers. Igor Kim – Close Brothers Seydler Research AG: Okay. Great. Thank you.

Thank you. We have no further questions.

On that note, let me thank you for your very good questions and elaborate ideas that you always put out for us. We want to thank you for following Evotec and we look forward to talking to you very soon again.