Evotec SE (EVT) Earnings Call Transcript & Summary

Good afternoon, good morning. My name is Werner. I work for Evotec. Thank you for dialing into our Capital Markets Day focused for the first time on our sustainability and ESG topics. We gave this Capital Markets Day a clear title, Together for a Sustainable and Efficient Shared Economy in Research and Development. Why? Because we fundamentally believe that these principles will make Evotec and our role in the shared economy for R&D even clearer and better. You can find the supporting materials of this Capital Markets Day on our website, evotec.com. And if you have any questions, use this presentation in the next 90 minutes, just to push the button on your left side of the screen, send in your questions and we'll answer the questions as they come at the end of this session. If you have questions outside of this Capital Markets Day, feel free to contact us any time. We are here and want to not leave you with any open and unanswered questions. On the next page, I have to make you aware of our forward-looking statements also throughout this Capital Markets Day, and I thank you for understanding on that. When it comes to what we prepared as an agenda to discuss with you, we first wanted to bring you today into why we think that sustainability makes us better and more competitive. So overall, ESG and sustainability topics for us are a competitive tool to make the company stronger and more resilient. We will then have a section where we will discuss where we stand today. We'll especially highlight our contributions in infectious diseases supporting UN SDG 3 goals. And with our just Evotec Biologics, we will highlight what better and more access for tomorrow does. At the end, we'll give an outlook on where we stand today as our business and as our way forward when it comes to news flow for the rest of the year. I'm here together with my colleague, Volker, who is heading IR and ESG efforts. I'm here together with Anna Upton, who will represent infectious diseases. I'm here together with Linda Zuckerman and Lisa Connell, who are representing just Evotec Biologics. And at the same time, let me also thank all the other people at Evotec who helped to bring together an outstanding sustainability report, which we have published recently and which is available and with full documentation downloadable on our website. When we are discussing sustainability, then you should see that we want to be with sustainability, better, more competitive and ahead of the curve. At the same time, before we even discussed sustainability, 2 steps back, the biggest and most important situation for all of us is our individual health. And it comes to the treatments for the 3,300 diseases that are currently not curable or not very well curable that are affecting us. So this is the key of Evotec to find cures for every individual disease. But nevertheless, we want to do this in a sustainable and long-term growing and impactful environment. When we talk about impactful, long term and environment, many people these days are looking at the world as a complex situation and it's true. You see more risks that are appearing at a faster pace that require higher agility and higher resilience than ever before. Having said that, we also see that the independence of these risks is increasing because of speed that we are all gaining in our lives, but when we think about complexity, we think about simplicity at the same time. Yes, we have created all together a complex world, but it is the core mission of Evotec to find simple answers that are curing diseases and that are helping to have more access on the planet. And that's why when we talk about in risk environment here and a global risk landscape, for us, it's not about to get stuck in focusing on the risk, it's for us really to focus what opportunities and what ideas can we generate when we look at this risk environment. When it comes to one very clear risk challenge and challenge for all of us, we have to put in context of sustainability, climate protection. Why? Because climate change is real and is also changing the focus of what research and development means already today and will mean in the future. What you can here see is heat-related deaths that are changing at a dramatic speed. So it's not only that we have to think about water in the future. It is also increasingly the case that with heat-related movements, for example, diseases are spreading much faster than ever before, that you see transmission happening completely different than ever before. And that's why climate-related research and development in health care is a core theme to think about when you think about a sustainable R&D environment. When it comes to sustainability for us, the key question is, so how are we measuring that precision medicine truly makes something better? And the key performance indicator that I want to highlight here, and that is driving a lot of our actions is thinking about and shifting the so-called disability-adjusted life years. What does this tell us? It tells us how many years of your life are happening at a healthy state or at a not-so-healthy state or even in a loss-of-life status. And you see the dramatic differences here between the societies on the more Northern Hemisphere and on the Southern Hemisphere and in the poorer environment of the globe or in the richer environments of the globe. But what you should also see here is that the top 5 disease burdening -- diseases are increasing everywhere. And that's also where there's a huge influence to the core themes of our focus areas in Evotec. So cardiovascular diseases, cancer, respiratory diseases and especially also metabolic diseases and neurodegenerative diseases are massive influences when it comes to the so-called day. So when we thought about many years ago about how to build Evotec's sustainability environment, we created a company where already in our purpose you see that research will never stop as long as the 3,000 diseases that are currently not treatable can be treated in a much better way, creating a holistic environment sustainability policy, but also for sustainability managerial frameworks is the only way this works because you have to bring a company together that goes way beyond a simple mechanism of supply and demand, but you have to create a company that has a framework in place that allow us to holistically answer and respond to the challenges that we see out there along our stakeholders, which go from not only people, partners, patients but also the planet and, of course, integrating this into a highly profitable business model, which is, of course, also our ultimate goal. When you look at the company's framework that we have built then it was key for us to build a business model, which combines 2 things. One is long-term sustainability. We are growing the company with innovation, but also with partnerships that allow projectability and that allow to stay connected and thrive within our community was key. But at the same time, we had to create and wanted to create a framework that allows us for resilience. Resilience means to bring a business model environmental, social and governance system, organizational, operational and technological systems together to, not only foresee but also to adopt and bounce that better than ever before, if any crisis might arise. Building a company is something that we are exercising and doing in the long run. And when we say long run, we gave ourselves so-called action plans, ranging over 5 years, typically, where we try to achieve not only numeric themes, but especially also qualitative themes where we said these are the areas where we want to shift and where we want to win. So if you would look at the evolution of Evotec in the last 1.5 decades, you would clearly see a paradigm shift from an isolated research and development problem-solving platform to today, an AI data-driven largely integrated platform with over 800 partners, which brought us to critical mass. The second thing you would see is that we have seen an evolution from the typical fee-for-service business model into a long-term upside-driven business model, together with our partners, where we're aligning interests to achieve a highly profitable royalty pool in the long run. And thirdly, we have gone from early discovery tools and applications driven especially small molecules to solutions along the full value chain up to commercial manufacturing in small molecules, in biologics and also in IPC-driven off-the-shelf solutions when it comes to cell therapies. With this paradigm shift of the company happening over time, and nevertheless, we saw that we had also to adopt to certain external challenges. When you think back, external change -- external crisis can come from different directions. This can be financial crisis. This can be pandemic trigger crisis or it can also be what we have to experience in the last couple of weeks, a cyber attack. So we cannot let this Capital Markets education go without giving you a short update on where we stand on our situation regarding our cyber tech. And I'm very happy to say that for us, we see that after the criminal cyber attack of Evotec on April 6, we are clearly bouncing back, and we have implemented a zero-compromise strategy when it comes to data integrity, data security and partner reliability with Evotec at the highest standard when it comes to data, data protection and safety of exchange of data with us. With this, we are in a fast progressing situation here after about more than 70 days of day and night work. We are about 80% productivity back by, we think, the 20th of June. And then we'll recover very fast into the second half of the year. And we already see that the opportunity of this crisis definitely was not wasted because we improved many processes that we are rebuilding now into our restart. And at the same time, we have also seen how to ensure that we are learning to even get better after such an intervention. And one thing is clear, we were best prepared for a crisis like this because resilience can clearly be claimed as a value around Evotec because we anticipated something to come. We were well educated. We had early detection, and we are going after this crisis with a clear, simple compromise reaction. And that's also why we are very comfortable that we can say that by the 20th of June, we'll go back to our dotcom knowledge work addresses that you think but also will see throughout our interactions and network. When it comes to where are we coming from, I always like to highlight that the key of networking into an evolutionary world for many partners has already been the key goal of Manfred Eigen who was bringing academic institutions together. What Evotec today is doing, and this is a clear mandate in our ESG competitiveness compass is to create a network of, for example, mission-driven foundations who are building their drug discovery and drug development efforts on our platforms. I'm happy to announce that we recently open a partnership with Open Philanthropy. And you have, of course, seen that we're working very closely with the Gates Foundation, with the Batten Disease Foundation, the TB Alliance or that we are also building a network, for example, with the Global South, and you see here a little picture with Mia Mottley, where we have recently discussed how can we access novel technologies like fully continuous manufacturing to bring more biologics to people who, at this stage, cannot afford such a technology. But here, novel technology will open novel markets, and that's where building efficient networks is part of our DNA, and that's also why we are expanding on building here efficient networks. When it comes to building efficient networks, I always want to highlight that what Evotec does is razor-sharp-focused on 4 key themes. One is to come to technological leadership when we are talking about our mix-driven drug discovery and drug development. Why is this important? Because with the idea to make a disease much better anticipated and to react in a much more tailor-made way, Omics will pave the way for true precision medicine. When we're discussing off-the-shelf solutions with Induced Pluripotent Stem Cell, then we're talking about true cures and with this enhancing human well-being. When we're discussing just Evotec Biologics, we are building not only the most advanced and the most technologically sophisticated AI machine learning-driven system into biologics, but we are also driving a cost revolution and the cost paradigm shift into biologics. And with this, we will increase access dramatically as you will hear later. And combining all our tools in end-to-end share R&D continuum allows all partners to efficiently work together with Evotec. With this efficiently combining, we are saving a lot of footprint. We are saving a lot of duplication. We are saving a lot of things on this planet not to happen because they are efficiently done together with Evotec. And that's why, for example, Evotec was in the current changing funding crisis for biotech companies, represents a very efficient way to build sustainable partnerships even when there is a short ebb of funding not flowing so well. We don't want our partners to stop their R&D efforts. On the next slide, you can see, if you bring this into a more quantitative way, that we had come to critical mass when we are talking about a sustainable and efficient R&D environment. With more than 800 partners where 92% of our partners are repeating their business with us while continuing their business with us, we are becoming an infrastructure that creates a foundation in the early-stage R&D environment. And by creating here a partnership network within pharma, mission-driven foundations, academics, biotechs and midsized pharmas, we are building a global network that is just at the beginning when you look at what we are building into the future. And just at the beginning is also true for our long-term vision when it comes to our business model, which is a royalty pool on the basis of operational collaborations where we are building aligned campaigns with our partners when it comes to mindset but also incentives. And with this a company that has a long-term perspective, that has a very good downside protection because we have created this critical mass as a platform, you will see that progressing more than 130 pipeline assets will have significant impact on many of the diseases that are today a global threat and where Evotec is very happy to have a direct impact not only on the disease, but also with our company to make the planet a better place. Where we stand here today will be illustrated to you in a bit more detail now by Volker, our Head of ESG and Investor Relations. Thank you so much for this time.

Thank you, Werner, and good morning, good afternoon to everyone on the web. It's my pleasure now to dig a little deeper into data on our ESG performance, where we stand today, what we have achieved, in particular, in the last 2 years, when we made a strong commitment and the field of environmental topics with adhering to science-based targets. And on the first slide, I would like to share on -- give a bit more context on where we stand in our industry. We've chosen the subgroup of external innovation companies. And in this group, we observed that we are in the upper quartile of companies which have already communicated a commitment of science-based -- to science-based targets and we have already submitted these targets at the beginning of this year on the 2nd of January with the SBTi, and I will give a bit more context later where this also resonates with our partners and what the next steps will be. Speaking of resonation, apparently, our entire sustainability strategy is from what I observed here basically on a day-to-day basis is that is also resonating well with our people. We are creating an environment where people are engaged, committed where they thrive, and last but not least, this is reflected also in our workforce turnover of permanent employees, I think, which is very competitive in the overall industry context. And it's also recognized by external rating agencies to name one, which is EcoVadis, where we are also in the upper quartile in our industry, which also covers larger pharma companies. And I think for a company that is still relatively young, this is already a great achievement. When talking about SBTi commitment and our partners, and running a shared economy business model, I think it's also in this context, important to share the same ideas with our partners. And you see here the larger names in our industry, which have set science-based targets already a few years earlier than we did, basically creating the first wave. And we are now in the same camp and will also be, yes, transmission factor in our industry when we engage also with our suppliers. And you see here, these targets are very well aligned with our goals, which we, as I said, submitted this year. But before that, we obviously had to start the process 3 years ago. We committed ourselves at the beginning of 2021, and then had to come up with a thorough analysis of our greenhouse gas inventory before setting targets. And the reference point is the year 2021. And from that basis, onwards, our near-term goal is to reduce greenhouse gas emissions by 50% by 2032. Even more ambitious in terms of timing is the commitment to have renewable electricity in place in 4 years from now by 2026. We will reduce Scope 3 emissions, not only in absolute terms -- not only in relative terms, which would be easy for a fast-growing company like ours, but also in terms of absolute measures. And that means that the intensity of Scope 3 emission needs to come down by 72% until 2023 -- 2032. And this needs to be aligned with about 80% of our suppliers by revenues. And with these companies, we will engage -- or we have already started engaging and will continue the process, and we've convinced them to have SBTi targets in place also by 2027. Where do we stand? What's the reference here, I said it's 2021. And the mix of Scope 1, 2 and 3 emissions is basically about 20% is Scope 1 and 2, split in 50-50: 10%, Scope 1; 10%, Scope 2; and 80% is Scope 3, which is, to a very large extent, related to the supply chain, and this is why it makes so important also to engage with our suppliers. We have reduced Scope 1 and 2 emissions in 2022. So the targets were basically submitted in 2023, but that didn't stop us from starting the whole exercise. Business grew at 22%, Scope 1 and 2 came down by 2%. Scope 3 grew in line with revenues, but the intensity based on many metrics like revenues, square meters, employees has come down already. But obviously, here, the efforts need to be improved further. I mentioned that we already started with initiatives to reduce our CO2 footprint. You saw the release maybe last year that we have installed the first air source heat pump in building in Abingdon and the building E95. And the Toulouse site has joined the energy heating network to lose Energy Durable, where the savings of CO2 emissions amount to about 2,000 tonnes per year, representing 5% of our total Scope 1 and Scope 2 emissions only at this 1 site. And it's recognized by our partners. And this is then closing the loop to the opening remarks of Werner when it comes about competitiveness. We are aligned with our partners. We share the same goals, and it seems that there's at least a chance also to increase the share of wallet with these partners. Chiesi, a certified B corporate in Italy, has awarded us the price as Supplier of the Year in particular, for our SBTi commitment and we feel very much encouraged. It seems to be that we are on the right way and we will continue to take large steps going forward. What are the next measures? And it's very obvious on this slide, about 90% of our Scope 1 and 2 emissions are triggered at 6 sites, and you see here the dominating side is Verona. And there is a quick win here because the energy mix is not the same as it would be, for instance, in Hamburg, where we already source 100% renewable electricity. On a group basis, renewable electricity is accounting for about 24% of our total electricity mix. In Verona, it's only 10%. And we have already changed the contract structure there, and you will see a significant decrease of emissions in Verona already in 2023. So we will be definitely a bit ahead of plan in 2023. So this is the Scope 1 and Scope 2 mix, and when we look into the next themes, it's obvious that we have to talk about waste and water in the context of biodiversity and circular economy. We started with really measuring our waste data in 2022. We adopted a number of estimates for the previous year, quite conservative assumptions, which on paper leads to a 25% reduction in rates, which may not be painting the full picture, but the data you see here is more robust. And you see that about a bit more than 50% of our waste is already recycled. However, recycled -- however, there's another 15% where there's still landfill and the commitment here is to have 0 landfill in 2 years from now by 2025. When we talk about water, clearly, Toulouse is leading here and water consumption has increased in 2022 visibly, which is purely owed to the construction work that's going on for building the second J.POD in Toulouse. And while total water consumption has increased by 5% only for the group, so disproportionate in terms of -- in comparison to revenue growth. It was obviously fast and Toulouse, if we adjust -- I wouldn't say adjust, but if we have the construction work in mind, I think it's fair to say that we have slightly reduced water consumption overall in the group due to more efficient processes, which we have implemented. On Scope 3, a word on our supply chain and the mix here, you see a large group of suppliers located in Europe and the remainder basically in North America, and only a very small fraction in Asia. So we are very close, and our suppliers are very close to us, which sometimes makes the communication a bit easier. We're talking about more than 6,000 suppliers and we will engage and have already started engaging with them to align our targets and their targets going forward. We have introduced our Supplier Code of Conduct in 2022, which gives clear guidance then going forward. Coming to the most critical parts, which is the driver of innovation that is our people. And so covering the social aspects within ESG, you see a very heterogeneous group of young and talented people, well-educated. The gender split for the group is basically the same as you see in the world. We have increased the women -- the share of women in senior management from 25% only 3 years to 31%. And continue on that track with now 4,000 -- almost 5,000 people in place growing at 10%. We see good chances that this mix is also improving going forward. But we're not only focusing our D&I activities on the question of genomics. All 7 dimensions of diversity, equity, inclusion are relevant here for us. And this is, in the end, the core driver, the culture, the values that we share with our people for further innovation and for further competitiveness in the market. In order to get there, this is a longer race and more structural improvements need to be implemented, and the effects of these measures are not always measurable in the first year. We have created the so-called EVOacademy already 1.5 years ago, where we have a systematic education and trainings for our people. Focus this year will be on health and safety strategy where we have a shift with a more proactive and preventive approach rather than measuring only incidents that took already place in the past, where we may not learn always from, but taking a more proactive approach here is important. And what is also the second important measure this year is, and it's also rather proactive is that we will listen to our people by conducting an engagement initiative, engagement survey from which we expect that input for action plans going forward, which targets the well-being of our people and also avoiding risks and having all these activities in a good framework and a good governance. And talking about governance, I'm glad that in my position as being responsible for ESG activities, I have full support of management and, at the same time, strong backing by our Supervisory Board, which has implemented the ESG committee last year, where we are in a regular exchange of ideas and thoughts to improve our sustainability strategy going forward, basically every day. And I think this is the structure that is needed to really make it a sustainable exercise and not just a blip in the long-term race on finding cures for the more than 3,300 diseases, which are still not cured. And on that note and dealing with a specific disease area or group of diseases that are very relevant also in the context of new and sustainable -- sustainability development goals, I would like to hand over to Anna.

Good morning, good afternoon, everybody. My name is Anna Upton. I'm responsible for infectious disease at Evotec. And I'm glad to give you a bit more information on how we have been contributing towards the UN Sustainable Development Goal 3 and in particular, the subtargets related to communicable disease. We recognize that with our unique business model and with our strong infrastructure and expertise in this area, we're in a position to make significant contributions towards this particular United Nations Sustainable Development Goal. And I'd like to spend a moment illustrating some of the ways in which we're making those contributions by looking at 3 particular subtargets. First of all, to turn to Target 3-B, which speaks to the aim to support R&D for new vaccines and medicines and also to access to essential medicines and vaccines for all. We're able to contribute towards this by leveraging our very powerful drug discovery and development infrastructure and the expertise we've built and technologies. Both for our co-owned pipeline of projects and to support numerous other partners on our platforms to develop their own programs. We're also supporting achievement of this subtarget through the paradigm-shifting biologics manufacturing processes that you'll hear about more from Linda and Lisa in a moment. To turn to Target 3.3, this sets out ambitious targets to end long-standing epidemics such as AIDS, TB and malaria as well as to combat other communicable diseases and hepatitis. As a contribution towards this target, we are progressing more than 30 projects in our pipeline that are related to TB, hepatitis and other communicable diseases. And in addition, we're active members of consortia that are globally pursuing ends to these epidemics as well as supporting a large number of partners on our platform to progress their own programs contributing towards this target. And finally, of course, we're also contributing to Target 3.4, which aims to prevent and reduce early death related to noncommunicable disease and promote mental health through the more than 100 projects in our portfolio related to these diseases and through collaborations with an extremely large number of partners on our platform, more than 800. To give you a sense of the significance of those project numbers I just mentioned within the overall context of our pipeline, we're illustrating here the percentage of projects related to disease areas mentioned in Sustainable Development Goals 3, and also 5, which speaks to gender equality as a percentage of our overall project portfolio. What you can see on the left and in the breakdown on the right here is that in addition to other important diseases such as age-related diseases, a full 57% of our projects are dedicated to disease areas related to the Sustainable Development Goals 3 and 5. And then the breakdown on the right, you can see that 7% of those are related to advancing women's reproductive health and more than 10% related to the communicable diseases. If we take a moment to look at the global needs associated to achieving, for example, universal access to contraception related to SDG 5 and fighting communicable diseases such as hepatitis and TB mentioned in SDG 3, you can see the potential impact on advancing interventions in these areas is on a staggeringly large number of individuals worldwide. And this is not only true when we consider well-known global health issues, such as TB and malaria, but also when we consider emerging or growing crisis in the communicable diseases space, such as the antimicrobial resistance crisis. Antimicrobial resistance is referring to bacterial infections, which are resistant to the current treatments available. And at the moment, an estimated 1.2 million fatalities related to antimicrobial resistance or AMR are estimated to occur annually. This number is expected to grow to the very large number of 10 million fatalities per year in 2050, assuming continuing conditions as they are today around the globe. This AMR crisis is anticipated because of a combination of core incentives to conduct R&D in the space while at the same time, bacterial strains resistant against the current treatment options continue to emerge and gain hold globally. As you can see on the left here, new drugs in the space have been entering and exiting the market in such a way that the overall number of treatment options is declining. And on the right, the results of the 2021 survey by the WHO show that the pipeline in R&D for new antibacterials is relatively small, and many of these treatments being discovered and developed will not act against the most important pathogens today. In addition, another aspect of this field revealed by the survey is that many of the organizations developing new antibacterials are small and even micro-sized. And so, of course, rely on access to infrastructure and perhaps even expertise and experience of others to complement what they have in-house to get the job done. It's clear that we have an opportunity here through our work to contribute towards supporting our partners through our ID platforms and especially our AMR shared R&D to help drive the field forward through the efficiencies and flexibilities of the use of a shared R&D economy in this space. Finally, when we consider the importance and uses of antibacterials to support the success of procedures used in modern medicine, it's easy to see why work in this field can have very far-reaching consequences and impact the lives of very vast numbers of people around the world. Another example of an emerging or even reemerging communicable disease issue where we're making a contribution is the resurgence of vector-borne disease that is occurring due to changing world conditions. The examples shown on this slide are viral infections transmitted by the bite of a mosquito. And there's growing evidence that a convergence of urbanization, globalization and climate change is driving a resurgence of disease due to these infections. As Werner mentioned earlier, this is heat-related disease, and dengue cases have been increasing over around the world. Another example is that chikungunya virus, known as a neglected tropical disease, has now been documented in countries such as Italy and France. In our antiviral pipeline, we are addressing chikungunya virus through a clinical stage therapeutic project. And in addition to this, we are seeking to put in place collaborations that will work towards interventions against dengue and Zika where there are very few treatments and vaccine options available today. These viruses are also considered to have pandemic potential according to worldwide organizations. And as we know from recent experience, viral pandemics are a permanent threat to the world today. The time line shown here only emphasizes the frequency at which these emerge and the certainty that further pandemics will threaten us. Our PRROTECT initiative was put in place to help us to make a contribution towards pandemic preparedness and to rapid responses in the event of such pandemics, and our antiviral pipeline is making investments in projects which will pursue Noveland interventions against viruses of pandemic potential. As Werner mentioned briefly earlier, very recently, we were awarded a grant by the Open Philanthropy Foundation to pursue innovative small molecules targeting RNA for henipaviruses, including Nipah that you see as part of this time line. In addition to our antiviral pipeline, as for other areas of infectious disease, we're also supporting multiple partners through our end-to-end shared R&D, which incorporates a fully integrated antivirals pipeline. To get into a little bit more of the specifics of how we are in a position to make these contributions towards projects that seek interventions to communicable disease, I'd like to share with you that this is, first and foremost, through leveraging the infrastructure we have built up in this space together with our expertise and fast experience in this area. Altogether, we have about 200 scientists within the company who are dedicated to infectious disease and working across multiple functions. We have a long history of working across the infectious disease space, including in the AMR, TB, virology and antifungal areas. And we're able to use this extensive experience and expertise together with knowledge we gained through our global partner network to ensure that we can make strategic investments to evolve our technologies and platforms, to maximize the value of our shared end-to-end R&D in the space and also to drive our co-owned pipeline of projects forward. Because of our infrastructure and the capabilities of our teams, we're able to work in a modality-agnostic approach and targeting either the host or pathogen by tapping into our immunology, microbiology and other specialist teams. This allows us to work flexibly and efficiently across a vast variety of projects within our pipeline and for our partners on our platform, really gaining efficiencies in this space. And finally, of course, our infectious disease platforms and technologies and teams are integrated seamlessly with our end-to-end R&D offerings enabling us to bring AI, ML tools, our state-of-the-art Omics and other technologies such as translational biology technologies and bioinformatics to add value wherever we can to infectious disease projects. In the TB space, the ability for us to afford access to our platform can be particularly valuable to our partners who may not have access to containment labs for TB bacteria, or to the particular assays platforms and expertise that we're able to share as part of the shared R&D economy in TB by supporting partners projects on our platform. We have recognized global expertise in the TB drug discovery and development area, in particular. And we're committed to leveraging this to make a significant contribution as we can in the TB drug discovery and development space. Towards this goal, we're active members of 3 major international consortia that have the mission to drive forward drug discovery and development and developments of novel combination treatments against TB, including drug-resistant TB. Within this consortia, we collaborate with academic, pharma and other partners to drive forward in active drug discovery and translational science pipeline and we're supported in this through grants we have received from the Bill & Melinda Gates Foundation. And in addition, through partnerships we have had in place long term with the TB Alliance and the Helmholtz Centre for Infection Research as well as a newer partnership put in place with the University of Dundee. Finally, we're contributing to the SDG 3 related to this disease through maximizing the impact of our knowledge and program results through our commitments to publications in this space and sharing our knowledge and expertise in clinical development of TB through our consortium activities. In the AMR space, also, we're committed to leveraging our knowledge and expertise, which we have gained over many years of work in this space. We have been making platform investments to ensure that we maximize the value of our shared R&D in the -- against in the antibacterials R&D space. For example -- so just a few examples are shown here. One is that we have collected and fully characterized a very large and important strain collection, which is used in many antibacterials programs for partners on our platform. We're committed to continually evolving and improving our complex assays technologies and platforms, including an embedded dedicated Omics and bioinformatics platform to support discovery and the understanding of disease biology. And we have also been working together with partners and internally to develop predictive models and other tools to aid in specific antibacterial drug design. In addition to our platform investments, we have been making investments in innovative companies in the space of AMR. And our most recent investment is to set up a joint venture with Boehringer Ingelheim and bioMérieux to found Aurobac Therapeutics. Aurobac Therapeutics has the mission to move the paradigm in antibacterials R&D towards a more precision approach in line with the laser sharp-focused objectives we have here at Evotec. This will incorporate diagnostics as well as novel treatment modalities. In the antiviral space, in addition to supporting partners with our antiviral platform embedded in our shared end-to-end R&D, we are making significant investments in our pipeline to target important viruses using both hosts and pathogen approaches. We're working across modalities to interrupt important parts of the viral life cycle in our direct antiviral projects and to boost the host immunity to viral infections by targeting the innate and adaptive immune responses. In both our direct antiviral and host approaches, we are always seeking innovation incorporating, for example, novel RNA-targeting approaches in our antiviral projects as well as creating completely novel biologics modalities to target the innate and immune -- adaptive immune responses at the same time. A look at our antiviral pipeline just illustrates its breadth and the range of viruses that we're seeking to find new interventions for. These include viruses such as HBV, the neglected tropical disease, chikungunya, and viruses of pandemic potential such as Nipah, which cover long-standing global health issues mentioned in SDG 3 as well as those viruses I mentioned, which are emerging or growing or anticipated to have pandemic potential based on conditions in the world today. As a final note, I'd like to mention that as with other disease areas, we're tackling at Evotec, we're committed to working across modalities, depending on the specific best needs and suitability for the unmet medical need in question, including the potential need for a rapid response. And of course, that requires -- especially access to biologics, for example, and this really becomes a critical piece of what we need to do. Then also in order to assure our contributions to these specific UN development goals. And with that, I'm happy to hand over to Linda, who can tell you more about our work in the biologics access space.

Hello. Welcome to the webcast. It's nice to be with you again. I'm going to share with you some examples of how our technology can be very impactful for our ESG goals as well as provide access to economies that don't have the potential to be the recipients of life-changing medications. This is one example where we are focused on PD-1 as a -- which is a transmembrane protein that's expressed on T cells. It functions as an immune checkpoint that negatively regulates T cell effector functions. Tumors have an amazing ability to subvert and get through this checkpoint and essentially go unnoticed by the host immune system, which plays an important role in sub tumor suppression. Antibodies against PD-1 like KEYTRUDA, Opdivo, Tecentriq and others, have been shown to have stunning effects in helping the immune system to better find and attack these -- better attack these cancer cells, wherever they are in the body. A large portion of the world does not have global access to these life-saving medications and our J.PODs, with the ability to build them much more rapidly and for a lower cost, gives us the ability to put them at the sites, reduce costs and impacts global access to these important medications. Another example of how we can help provide access is through the ability to reach people who have unserved -- important unmet medical needs and unserved indications. These could be rare diseases. These could be infectious diseases or diseases that impact small portions of the globe. One of the biggest ways to reduce cost is with the ability to create biologics at a very high titer. And if you can increase 2 or 3x the amount of biologic that you produce per unit volume, you are going to significantly reduce costs. It's one of the largest levers. Our Just-Evotec proprietary cell lines are some of the most highest expressing cell lines in the industry. We can also run multiple products within our facility at the same time and turn the facility from one product to another in a very short time due to the use of single technologies. What this allows us to do is to reach these unserved indications, rare diseases and people who wouldn't normally have access. So these are a few examples of how we can use our technology to be impactful with the global access lens. One third example is to take the example of disease-modifying antirheumatic drugs. These are biologics that are usually prescribed with -- for people that have, for example, psoriatic arthritis. These drugs can calm down the immune system, but they do it in a very selective way. It's essentially like a spam blocker in your e-mail box. So only the really good signals gets through to impact the disease and all of the missed signals are filtered out. Unfortunately, these types of medications are very, very expensive, especially here in the U.S. And you can see on this slide that we pay almost $65,000 a year for treatment, which is significantly more than other high-income countries as well. Because our COGS has the possibility to be significantly lower due to the use of our platform and continuous manufacturing, we really hope that we will be able to impact the ability to -- for all folks to access these important drugs through the reduction of costs. This gives us really important proximity to key markets. So these 3 are some examples of how we can aspire to really impact global access as well as local access and provide important avenues for medications. Here in the United States, the Inflation Reduction Act was passed in late 2022 by Joe Biden and Congress. It has a very stunning impact on the ability to potentially reduce the price of drugs and biologics also here in the United States. There are a couple of examples of how this will happen. First, Medicare is able to negotiate directly with drug companies. This has been prevented for almost 20 years, and the result was that Americans were paying 2 to 3x more than countries -- related countries as well. This is one important example of how the IRA is really going to push to reduce drug pricing. The second is that it caps out-of-pocket prescription drug costs for older adults. This cap will also allow for better access to these important medications here in the United States. It will be more affordable, health care in general, for more than 13,000 Americans and also prevents drug companies from hiking Medicare prices above the rate of inflation. Taken together, we feel, along with the rest of the industry, this will create strong competition and reduce prices here in the U.S., providing access to many populations that are not able to reach it. So how can we be more impactful as well and do our part both locally and globally? As you know, we just signed an exciting deal with Sandoz. Our mission is very aligned with their mission. Our mission to apply technologies and dramatically access -- apologies, dramatically expand global access to biotherapeutics is completely in line with Sandoz Act4Biosimilars, which also aims to increase global access through the adoption of medicines by 30% in 30-plus countries by 2030. So as you know, we have shared some of this information before in previous Capital Markets Day but I'm happy to share with you some of the key tenets of this partnership. It will be a long-term partnership covering the development and commercialization for several biologics and monoclonal antibodies as well as undisclosed payments for progress into commercial space. This is a CDMO+ model with a commitment for commercial manufacturing. And our joint promise to lower the cost of biosimilars through continuous manufacturing, which is the central hallmark of our platform. There's also a nonexclusive licensing option for Sandoz to set up their own J.POD, which we call an S.POD and this will create a global supply network for continuing both internal and external capacity for these important medications. And we are thrilled to be able to have announced this partnership. As you know, we have 2 manufacturing sites here in Washington State, one in Seattle and the other in Redmond. We are currently building our third manufacturing site in Toulouse, France. With that and the possibility of an S.POD, we are fully realizing our commitment to a global network and providing access. This also provides tremendous supply chain resiliency. So in sum, we -- with this deal, have the first large-scale industry partnership for Just-Evotec Biologics. It fully validates our continuous manufacturing platform as the platform of choice, not just for biosimilars, but for other novel biotherapies. It provides us with a road to a shared economy for biosimilars as well as expanding our royalty pool and we'll secure the first large-scale manufacturing volumes for our J.POD technology and our sites both here in the U.S. as well as in Europe. And it will be the starting point for the next wave of revenue-generating deals for Just-Evotec Biologics. And with that background, I'm going to turn the attention over to my colleague, Dr. Lisa Connell-Crowley to share with you a little bit about how our technology can impact ESG and what we're doing in that regard.

Okay Good morning, good afternoon, everybody. Thank you, Linda. So I'm going to share a little bit more about our manufacturing platform and our facilities and the environmental sustainability. So one of the big advantages of our manufacturing platform is the fact that our process runs continuously. So in traditional manufacturing, each unit operation has operated discretely. One at a time, the product is held between each step and it's a little bit more manual in this way and requires people sort of at each stage of the process. In contrast, our continuous manufacturing platform, actually, all the unit operations are set up and connected at the start of the run. And so this product is being made in the bioreactor, it is harvested and purified continuously to drug substance. This happens 24 hours a day, 7 days a week for 25 days or more in a highly automated manner. And so this enables what people in the industry are starting to call lights-out manufacturing, where instead of the operators even being -- working on the floor with the equipment all the time, basically, they're able to monitor remotely, how the process is running, they can feed it periodically with more buffer and more media, but this allows us to basically kind of remove some of that human intervention and hopefully reduce risks of failure. Another big advantage of our continuous manufacturing platform is that the process is highly intensified. This means we get more product out of the process in a smaller footprint. So we've intensified our bioreactor operation using our highly productive cell line that Linda has mentioned. We also have proprietary media and we -- the way that we operate as we are able to grow ourselves to very high cell densities in the bioreactors. This means we're able to produce a large amount of product in a small bioreactor. And then to couple -- we couple that with an intensified purification process to basically handle higher product loads on each of the different unit operations, on the chromatography steps and the filtration steps. This allows us to use smaller equipment and less raw materials to purify the material. As Linda mentioned, we've also -- we use single-use systems. These are single-use fire reactors, media bags, buffer bags and also single-use manifolds which allow us to turn over our equipment quite rapidly between runs and actually between products that this saves time and allows us to be more productive. And I'll talk a little bit more about that in a couple of slides. And so this -- in total, this really the process footprint is quite small. So then what in turn, this allows us to have a smaller footprint plant, which is what we call the J.POD. And together, all of these advantages are allowing us to drive down our cost of goods significantly compared to traditional CDMOs. So let's talk a little bit about the J.POD facility. So it's quite flexible and agile as we've mentioned. If you look on the far right, it does have a quite a significantly smaller footprint compared to traditional manufacturing. Our current J.POD facilities, the one in Redmond and the one in Toulouse are about 130,000 square feet. And not only is this driven by the smaller process footprint, but the elimination of, for example, clean and steam and place utilities and piping because we're using single-use systems, so we don't have to clean large things, steel tanks and so we can just eliminate those from our buildings. Additionally, the cost of the J.POD because it is smaller is a lot lower than a traditional facility. The current J.PODs are coming in about $250 million. And this, again, helps to drive down our cost. And then these facilities because they are smaller, they're faster to build. And so we're building -- currently, we're building out a -- the J.POD in Toulouse. And the building time line is about 1.5 years. And because it can be built faster and they're smaller, this makes them more deployable. And as Linda mentioned, we can hopefully build these where the patients are, where the patients need the medication, we can have J.POD facilities coming closer to them. So let's talk a little bit about environmental sustainability. So for our J.POD Toulouse building, we've actually been designing environmental sustainability as part of our -- into our design. So I'm going to talk about this on the next 2 slides. So basically, we have submitted for LEED Silver certification for the J.POD Toulouse facility, and I've got some of the elements listed on this slide. These include reducing water usage. So again, because we don't have any clean or steam in place -- this utilities, we're actually using about 50% less processed water compared to a more traditional biologics facility. We also are using obviously low-flow fixtures for our showers and restrooms, Aquasense faucets. We're using sustainable building materials such as low-carbon concrete, also insulated aluminum panels as part of the outer cladding of the building, which not only are sustainable, but they are also very low maintenance, which saves costs. And then for our electricity, we are using, as Volker mentioned, the Toulouse district heat. We're also going to have solar panels on the roof of this facility as well as on the parking structure and we're adding more EV chargers to the Toulouse Campus purity site as more and more people are driving electric cars. So these features are not only better for the planet, but they also reduce our operating costs by reducing the energy and water usage. Let's talk a little bit about energy efficiency. So interestingly, for biologics manufacturing, about 85% of the energy usage is actually from the facility itself. And this includes mostly HVAC, so the heating, ventilation and air conditioning as well as the lighting and only 15% of the energy usage is actually coming from the manufacturing process. And so again, by reducing the facility footprint, we're reducing our energy usage. Also, as part of our J.POD design, we use small clean room pods which is where the manufacturing occurs. And so the clean room space is the most expensive part of the plant, and it also uses the most energy because you have a lot of air exchanges and you basically have to -- you use a lot of energy for your HVAC. And so by really reducing that space as small as possible, we're saving both cost and energy. We've also improved the energy efficiency of some of the other systems. For example, our water for injection is generated by electricity instead of by steam, which is more traditional and that uses natural gas. So by using reverse osmosis membrane technology, we can basically eliminate making [indiscernible] with fossil fuels. We've also done a lot of energy efficiency around heat recovery, and trying to recover heat from certain operations and then feed it into other operations such as heating water. And so this has boosted to efficiencies by 90%. We also use LED lighting. Surprisingly, lighting in a facility uses a lot of more energy than you would think. And so by switching to LEDs and using occupancy sensors, we can really reduce energy there. And then we also rightsized the air changes per hour in our labs, again, to reduce our HVAC burden. And then finally, just looking at the energy mix that we have in our facilities in Washington and J.POD. So Washington State is actually transitioning to fully renewable power. We actually have a lot of hydropower here and then they're also building up a lot more wind and solar. And so this really sets us out for the goals that Volker outlined, trying to switch to 100% renewable electricity. Same for in Toulouse. We've talked about the energy heating network, and so we're tapped into that as well for the J.POD. And this also puts us on the path to fully renewable electricity. Okay and then finally, we do have some collaborations with a number of groups to really help further our environmental footprint. One of them is NIMBL. This is a National Institute for Innovation and Manufacturing Biopharmaceuticals. So this is a U.S.-based public-private partnership that we are a member of and we are actively involved in one of their work streams around process intensification and continuous manufacturing of biologics. And this team actually includes a sustainability team, which we're leaders on and it is consisting of a number of different pharma companies as well as vendors. And so this team is -- basically, right now, we're modeling biologics manufacturing using process mass intensity, life cycle assessment and really trying to identify ways to reduce process and facility environmental footprint and actually decarbonize manufacturing. We also have a sub team of this team dedicated to improving the sustainability of single-use plastics and trying to move to a more circular plastics economy as we transition away from fossil fuels. And so this is a pretty hot topic now, obviously, in the biologics industry and its been really great to work with not only other companies but also the vendors who are very keen to actually move away from fossil fuel-based single-use plastics that can't be recycled. We've also signed on in Washington to the My Green Lab program. This is around our -- basically our lab operations to improve their energy efficiency, reduce waste and also remove environmentally damaging materials from our labs. And then finally, as I said, while we're not able to recycle our single-use systems yet, we've been working with Stericycle in Washington State to recycle all of the plastic film and styrofoam packaging that comes with our single-use materials as well as other materials that we get to at least start to really start recycling at least some of it. And you can see how much we've been recycling in the last year of plastic film and styrofoam. So anyway, with that, I'm going to turn it back over to Werner.

Thank you so much. As you can see, only companies that are sustainable can be also companies that are competitive. And with this, in just a few aspects that you have seen here, for us, it is so important to set effective goals on multiple dimensions, of course, starting with profitability and revenue growth, but fostering this with other initiatives that make us continuously improve and with this make us keep our promise when it comes to ESG goals. So also in '23, we have given ourselves clear guidance on what we want to achieve in ESG and also clear guidance in what we want to do to listen to not only our partners, but also our employees to make the company better and better. When it comes to our goals, we are looking at a long-term for Evotec to grow and to become more profitable. Nevertheless, short-term guidance is, of course, very important to us as well. And that's why growing the company in 2023 is a key goal for us. Here, we have to consider the onetime effects that we will have to evaluate from cyber attack. But overall, we have seen an excellent first quarter, and we see a strong order book into the second half of the year. So that's why, again, taking a onetime effect of which we will evaluate in the next couple of weeks, will show you that the long-term trajectory of the company are in a very good state. And that probably was also well illustrated by the deal flow of the last couple of weeks, and the deal flow that you will see in the next couple of weeks. When I say long-term aspirations, you have seen before that Action Plan 2025 is just the beginning of where we are going. And one important element of Action Plan 2025 always was to come to a higher profitable share of milestones that we want to achieve in the years, '24, '25 and also starting with '23 of course, and also that we will turn from a start-up situation in Just-Evotec Biologics into a breakeven and then highly growth and highly profitable situation going forward. Here, the deal flow with Sandoz was important but also let me remind you of other very important alliances in Just-Evotec Biologics like, for example, we have it with the Department of Defense or other companies that are using fully continuous manufacturing technologies already as we speak. Going forward, we are happy to confirm our Action Plan 2025 goals and see that this is just the beginning of what is then to come in our news flow that will be focused around our PanOmics such as experiencing the starting point of PanOmics where I think Evotec is truly leading the industry and never -- and I think just to highlight once here, we are running together with our partner, BMS, the largest targeted product degradation platform in the industry at this stage. And this is just amazing what transcriptomic's data delivers to us in starting here novel clinical trials and novel clinical experiments that will show the power of making so far undruggable drugs with iPSCs. So induced pluripotent stem cells, where off the shelf solutions will lead to cure. We have shown a great partnership already at the beginning of this year with Janssen to start, we are progressing very well with our partner who is providing a pulp system for cell therapies in type 1 and type 2 diabetes [ cell over ]. And you will see also here that our oncology portfolio in cell therapies is progressing very well on the basis of induced pluripotent stem cells. Having said that, our iPSCs drug discovery platform was, of course, also the founding element of our neurodegeneration -- neurodegenerative alliance with BMS about 4 years ago, and it was fantastic to see that this partnership was prolonged for another 7 years to build one of the most innovative neurodegeneration pipelines in the industry together with BMS, which we have announced at the beginning of this year. Just-Evotec Biologics is really on its way and thank you so much to Linda and Lisa for showing us that this is not only a paradigm shift when it comes to cost of goods in manufacturing, but also how fully continuous manufacturing is in a holistic way, changing multiple aspects, including also the environmental footprint when it comes to biologics. Our shared R&D platform will show significant progress by the integration of AI and other tools in making here drug discovery more efficient into the future than anyone else can do this, and we can do this together with our partners. And as already mentioned, on a group level, we are holistically committed to sustainability and ESG goals as you have seen. With this, let me thank you for participating in the short, but I hope, insightful selection of topics where Evotec is contributing to higher competitiveness through what we are doing in ESG initiatives. Let me thank our partners who are valuing our holistic commitment to research and development and I want to also thank you very much my partners who have been giving this presentation together with me here because it was a great try together with you to bring this story together, and I hope we have triggered a lot of questions, which we're looking forward to. Thank you so much. Thank you so much for following Evotec.

Thank you Werner. So it's my pleasure to host the Q&A section and to introduce the questions through the respective speakers. I think the first set is related to governance topics, and then I have a few on infectious diseases and biologics, and I assume there are more to come. So let's kick it off with question on the cyber attack. You mentioned the 80% productivity goal by 20th of June. And Stephan Wulf from ODDO BHF is asking where or what was the trajectory from the start of the attack in April to where we are now and then going forward. And maybe Werner can elaborate on this.

Yes. First of all, thanks for the question. Secondly, as already mentioned, cyber attack happened on April 6. We took immediate, really consistent and zero-compromise reaction by taking all 5,000 systems that we have to do of all our employees down and with this secure maximum security for our partners and also within our systems. We also then took all server and other infrastructures down to really provide maximum security in our system and then have started a systematic zero-compromise forensic analysis of everything that had to be double checked before we go back online and before we start producing data again. So our initial trajectory was to come to about 75% productivity by the end of June. We are absolutely there. So it's really amazing to see and big thank you so much to the whole organization because only an organization like Evotec where all our people are smart, bright, agile and can adapt to such a situation like, for example, really defocusing the job from their daily activities to now completely complying and also rebuilding our IT infrastructure was just an amazing experience to see. So I think when it comes to the speed of rebuilding, we are ahead of what we initially wanted to achieve. Having said that, there are certain parts of the company, especially our GXP systems and development systems, where going back online is not only a question of how fast -- how fast can we be when it comes to going back online and going back to our partners, but how fast can authorities be in allowing us to go back to our partners because many of these systems have to be revalidated and have to be brought back to authorities to then allow us to go back. So here, we are a bit in the hands of others but we are also here experiencing in general, very good support. And last but not least, I think with knowledge work going back on the 20th of June as a starting process, it will also become very visible that we see light at the end of this tunnel, which at the beginning was definitely a very complex situation now becomes a manageable situation. And that's why I would say, at the beginning, we were down to zero productivity to the offset, now we are approaching 75% productivity. And then we have a catch-up situation in the second half of the year, the many experiments simply have been shifted or can be shifted. Other experiments are lost in the second quarter but that's a onetime effect, which we have to assume is happening to everyone in a situation where cyber attacks is clearly something where Evotec will not be the last company being hit, but Evotec will be one of the first company to help everyone to learn and become better in the situation.

Thank you, Werner. The next set of questions come from Charles Weston from RBC on supply chain engagement and also governance. On supply chain is the question, what is the leverage when we engage with our suppliers. What happens if suppliers refuse to clean up their act? Also on suppliers -- on partners, sorry, where we have -- the questions, did we see a scenario where our ESG strategy has impacted the custom -- the outcome of the tender. And I think answering the second question first. I think I'll take that. You saw the example of [ KZ ] with the award, obviously, then also the commitment comes to give more business to us. I think that's very positive example, and also in other discussions, this has a positive impact. And going back to the leverage that we have when we engage with our partners, I think this is something we experience, we've seen also with the larger partners that we have. For instance, there are some referring to EcoVadis ratings. I mentioned that a minimum score of 45 is needed. And if you don't come up with such a score, you will first enter into intense discussions with these partners, we are not there yet, we are at 52 so it's not affecting us. And this is a process that takes time, but at some point, one needs to be clear. And very often, there's also another supplier, which is maybe a bit more committed and then there is the necessity to switch. And that's understood by most of our suppliers and there are also larger names which have similar targets in place anyway. So I think there is enough leverage to really reach that goal. And lastly, on governance, talking about the incentive and to what extent our ESG targets are aligned in the -- and the incentive structure of management and executive team, you saw the slide that Anna presented at the end of the presentation with the 3 ESG goals for 2023, and they are also part of the incentive structure for management with a weighting of 20% and you heard me talking about the renewable electricity goal of 100% by 2026. This full year time spend is aligned with the long-term incentive target period that was set in 2023. So also here, a clear alignment with -- of goals with incentives. And on -- yes please

What is, of course, when you look at the portfolio of our partners, there's a clearly different view of when it comes to alignment on long-term goals of, for example, one experiment exercising virtual biotech companies versus long-term players in mid-term pharma or mission-driven foundations. So I think here, we stay completely also flexible to our partners in understanding where our partners come from because it would be also not the right way of putting here the same systematic in the same system in front of every partner that just would not serve as a business tool. So we also keep in all these aspects, flexibility and listen to our partners first before we are, for example, sending out forms that have to be filled in that don't make any sense to make a business more competitive. That's just a little add on that.

Thank you, Werner. Next set of questions from Pete Verdult from Citi on AMR and infectious diseases. First on Aurobac, he asked how many years before we expect to have an asset in the clinic or when Aurobac expects to have an asset in the clinic. That goes to Anna and maybe Werner chimes in. And then there will be 2 follow-on questions.

Sure. Thank you very much, Volker. Thank you for the question. At the moment, Aurobac doesn't have a public pipeline. So we're not in a position to answer this question directly. But all I could say is I would encourage you to continue watching the website and listening to their presentations, which they're giving very frequently around the globe at relevant meetings.

Second question is on how concerned are we that the incentives to stimulate AMR R&D are simply not in place to elicit a change from a pharma industry. Anna.

I'll start off, and then Werner could chime in as needed. So thanks again for this question, fully recognize where you're coming from with it. And as you can see, as we illustrated today, it's clear that there is an unmet need and so really based on this and especially the projections around AMR, we believe that the incentives will come. But meanwhile, what we're doing to try to support the field to move forward is take place in a way that we've illustrated today. And also, as Werner talked about early in the presentation today, really try to build networks with whichever actors we can, governmental, mission-driven foundations and many others to try to support the fields. And then, of course, really contribute to the efficiencies of the work that's being done through our end-to-end shared R&D. Werner, would you like to add to that?

Yes, the first is here to really acknowledge first. that AMR is a field where large pharma basically has exited. And if you look at how many R&D centers are fully function and in place at large pharma, it comes down to less than a handful today. So expecting the answer for that global threat from traditional pharma is possible, but the number of players is very small. And if you look, for example, if how many players have still a sales force in place for infectious diseases, then it's really something we are building. Next to pharma is -- players next to pharma is absolutely essential. And in Evotec providing here, for example, one of the largest practice discovery platforms for multiple partners in the industry is capturing really a very important space in the industry where we are fully profitable, which is totally fine for everyone who is entering that space, by the way. But where we are clear that it's not that one company is going to solve that topic. And if you look at, for example, players who want to enter the field and want to do something for the planet then I think the Gates Foundation has shown that they had a bigger impact in tuberculosis than any pharma company ever before without having a pharma platform in place. And I think that's also what you can portray now into other disease areas where other players can enter and will enter the field of malaria is, of course, obvious here, but also the field of dengue fever or the field of Chikungunya and Zika as pointed out, is clear. And if you expand that field into AMR, then to the monos, then staff areas or the box that we are all aware of can on a virtual platform, also with flexible sales forces people were trained into a completely new network solution coming where Evotec will be an essential part of that. And that's, I think, where the answer will not come from large pharma, but it will come with the contribution of large pharma, and that's also where we all have to think that into the new funds that are coming together, it not only public money coming in there, but also balance sheet money from government -- from pharmas coming there.

Thank you. And next question from Pete is on our strategy in the Chikungunya market as there are 2 companies having Phase III readouts for their vaccines. We're likely still this year. What is -- what are our plans in this field. Anna again.

So I can take that. So our project is actually progressing a monoclonal antibody treatment option for Chikungunya. So we would be more relevant in the event of an outbreak rather than pursuing a vaccine strategy.

And it's really a proof of concept for pandemic preparedness strategies and preparedness strategies, that's the first thing -- it's fully funded by external partners. That's the second thing. And yes, there will be a vaccine on the market, and I'm very happy that I know a lot about this vaccine because I also know many players behind that. But it's clear that all infectious disease threats at the end will not only need a prophylactic vaccine because it's almost unconceivable that you will vaccinate broad populations against these diseases. And that's why having an effective treatment is a second way of approaching every disease that you will see in infectious diseases.

Thank you. Moving on to biologics and Just-Evotec Biologics. Christian Ehmann from Warburg asks the question, what is the average continuous run time? That's the first part. And why is it not possible to run indefinitely? Lisa or no, Linda, I guess.

I'll do it. Yes, great question. So currently, our run time that we are targeting is between 25 and 30 days. We choose this -- and we've done a lot of cost funneling around this, and it looks like that's kind of the sweet spot for our facilities. There are people in the industry that will run 60 days or more. Eventually, you run into the issue where your bioreactor starts to fill up with a lot of cell debris so you can't just run forever. But depends on what kind of product and manufacturing you're doing. If you're -- if you have to run -- if you want to produce the same molecule, over and over, it might be beneficial to just extend the runs even further. If you're producing many different molecules, we're CDMO, so we do a lot of different things than we don't necessarily want to tie up a bioreactor for really long periods of time.

Thank you, Lisa. And a follow-on question from Pete on just -- do you have any active discussions ongoing with potential partners as sizes as Sandoz with respect to the development and commercialization of biologics. I guess Pete has to push his luck here a bit, but maybe Anna and Linda.

I guess maybe one answer, and then I'll turn it over to Werner is that it's a pretty exciting time at just because we are also seeing a lot of our early-stage clients who have progressed through the development pathway to get to later stage and then with an eye towards commercial. So this helps anchor as well the commercial use of the facility but we definitely always seek to engage in those types of discussions and have them ongoing with new partners as well as seeing our later stage -- our early partners move towards later stage.

The nature of our alliance with Sandoz is first strategic and secondly, fully committed. But thirdly, it's also not exclusive to the product category of biosimilars. So we don't exclude that there could be other partners also using fully continuous manufacturing platforms out of Just-Evotec Biologics for biosimilars. And if you look at the potential of biosimilars and the fact that there will be, we think, more than 25 biosimilars, absolutely valid targets to be pursued in the next decade then it is probably fair to assume that not a single company can build such a pipeline alone, and that's why it was also a very fair understanding of Sandoz to not even try to go fully exclusive with us because it would also block their learning of a platform that could potentially learn also from other situations where we can engage with this technology. So yes, absolutely, there are discussions going on. But at this stage, I think we also have to always stress that we have to also catch up in building our capacity first because people who want to build a biosimilar or to build a novel biologic also needs to have access to capacity. And here, you know that we are at this stage, only available or that we have only 2 trains fully available in our Redmond facility, which will expand to 6 over the Christmas period and then into the first quarter of 2024. And Toulouse is still in the making. So that's why we cannot run faster than we can go or however the saying is here but that the technology is starting to be established is simply amazing and great to see.

And last from Pete from Citi about the running costs of the J.POD, he wants to be reminded on that. Who'll takes that? Lisa? Linda?

Yes. The general operating class of the J.POD facility fluctuate with the difference of how many trains we're running. So it's obviously much cheaper to run it now when we have less -- just the 2 trains. And as Werner said, we're going to expand. The real advantage here is with the addition of the new trains, we only have to add a minimum amount of staff to add that. And so we -- as the facility becomes more fully utilized, we don't need to be hiring hundreds of people to do that build-out. So the operating costs once we are here today stay relatively modest and then grow only very small as we add the capacity, and that's a tremendous advantage of the facility.

Very good. Thank you, Linda. And last question I have here from Joseph Hedden, Rx Securities. In terms of single-use plastics materials we used in the J.PODs, will it be possible to be using only recycled materials at 1 stage? Or will there always be some element of new plastic use? I think interesting question also for our suppliers. Linda, please and, Lisa.

I can take this one if you want. Yes, I think there's -- like I said, there's a really strong interest in the biologics industry that move away from single-use fossil fuel-based plastics. We -- because through our NIMBL collaboration, we've been -- we interact directly with a lot of the large vendors that make these single-use plastics, and they are -- they are looking at a lot of different avenues. And it seems like including recycling, the current plastics, maybe making plastics with nonfossil fuel-based things. But the ideal space would be that we take a single-use bioreactor bag, recycle it and make another single-use bioreactor bag like that would be the circular economy that we all want to get to. I think there's a ways to go. But what we tell the vendors, and this is why we're in this collaboration in NIMBL, there's a lot of us that are like whatever you guys want to try out, we're willing to test it, we're willing to try it in our facilities because we all really want to move in this direction. And I think we're starting to pick up a lot of momentum right now. And as long as the vendors know that, like they will have a market for these things, then sure. I think, hopefully, we'll start moving rapidly in this direction.

Thank you, Lisa. With that, we have basically answered all the questions that were in the chat, and I would hand over to Werner for some closing remarks.

I would say it is great to see that Evotec can absolutely follow our 2025 goals. That we are recovering out of a cyber attack, which was a massive impact on the organization, which we all have to acknowledge as a whole time effect, but we will be back stronger than ever. And it is also for our stakeholders. Very important that we are not only building a highly innovative company when it comes to novel technologies in omics and in biologics, but that we are also building a highly sustainable and long-term thinking company with massive upside for our partners and for our royalty pool to come and this is only possible because we have the best people that are working for Evotec and focusing the company on the best that it has, namely on its people is what is part of our sustainability strategy. And with this, thank you so much that Evotec has the best people that makes research never stop. And thank you -- and thank you for giving us your time to follow Evotec and support us on our mission. All the very best. Have a good day.