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Surface Oncology Reports Financial Results and Corporate Highlights for Third Quarter 2018

On November 13, 2018 Surface Oncology (NASDAQ:SURF), a clinical-stage immuno-oncology company developing next-generation immunotherapies that target the tumor microenvironment, reported financial results and corporate highlights for the third quarter of 2018 (Press release, Surface Oncology, NOV 13, 2018, View Source [SID1234531244]).

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"The team we have assembled at Surface Oncology continues to excel in its execution, both in the clinic with SRF231 and with our later stage preclinical programs targeting CD39 and IL-27," said Jeff Goater, chief executive officer of Surface Oncology. "The overall accomplishments in the field of immuno-oncology have been transformative for patients, but we are driven by the fact that there is so much more to be done to help those affected by cancer. Our diverse portfolio represents a broad and unique approach to fighting cancers, targeting multiple pathways to overcome the immunosuppressive tumor microenvironment."

Selected Corporate Highlights:

Dose escalation continues for phase 1 studies of both SRF231 (CD47) and NZV930 (CD73), with initial data for SRF231 anticipated H1 2019.
IND-enabling studies for both SRF617 (CD39) and SRF388 (IL-27) are ongoing and filings are anticipated around the end of 2019 and early 2020, respectively.
A recent publication in the scientific journal Nature1 highlighted the role of IL-27 in, and its potential as a master switch of, the expression of certain checkpoint proteins.
Two scientific posters highlighting SRF231 were accepted for presentation at the 60th American Society for Hematology (ASH) (Free ASH Whitepaper) Annual Meeting in San Diego, CA:
° "The fully human anti-CD47 antibody SRF231 has dual-mechanism antitumor activity against chronic lymphocytic leukemia (CLL) cells and increases the activity of both rituximab and venetoclax"
° "Targeted inhibition of CD47-SIRP alpha requires Fc-Fc Gamma receptor interactions to maximize phagocytosis in T-Cell lymphomas" (Oral presentation)
Expansion of our facility at 50 Hampshire St., Cambridge, MA began in September. The expansion is slated for completion in Q4 and will add over 12,000 square feet of both laboratory and office space.
Financial Results:
As of September 30, 2018, cash, cash equivalents and marketable securities were $173.4 million, compared to $185.6 million on June 30, 2018. Research and development (R&D) expenses were $15.8 million for the third quarter ended September 30, 2018, compared to $12.1 million for the same period in 2017. The increase was primarily driven by expenditures associated with Surface’s advancing product pipeline, including increased R&D personnel costs associated with the growth of the Company. R&D expenses included $0.5 million in stock-based compensation expenses for the third quarter of 2018.

General and administrative (G&A) expenses were $4.0 million for the third quarter ended September 30, 2018, compared to $4.7 million for the same period in 2017. The decrease was largely due to a one-time charge related to employee separation costs during the quarter ended September 30, 2017, partially offset by increases in professional fees related to legal and accounting services. G&A expenses included $0.7 million in stock-based compensation expenses for the third quarter of 2018.

For the third quarter ended September 30, 2018, net loss was $17.2 million, or basic and diluted net loss per share attributable to common stockholders of $0.62. Net loss was $14.4 million for the same period in 2017, or basic and diluted net loss per share attributable to common stockholders of $5.75.

AC Immune Reports Third Quarter 2018 Financial Results and Corporate Update

On November 13, 2018 AC Immune SA (NASDAQ: ACIU), a Swiss-based, clinical-stage biopharmaceutical company with a broad pipeline focused on neurodegenerative diseases, reported financial results for the three and nine months ended September 30, 2018 (Press release, AC Immune, NOV 13, 2018, View Source [SID1234531243]).

Prof. Andrea Pfeifer, CEO of AC Immune, commented: "During the third quarter we raised USD 117.5 million, and broadened our shareholder base with 11 new institutional investors. We are grateful for the continued support of our existing shareholders who also participated. These proceeds are expected to fund our three pillar strategy through at least 2021, excluding potential incoming milestones. This capital raise, and the established investors who participated, are a strong endorsement of our scientific pipeline and business model."

"We also continued to advance key assets in our pipeline, announcing both the start and dosing of the first patient in the Phase 2 trial with ACI-24 in patients with mild Alzheimer’s disease and completing recruitment for the high-dose cohort of the Phase 1b study with ACI-24 for Abeta-related cognitive decline in individuals with Down Syndrome. Vaccines are potentially an important option for the treatment and prevention of neurodegenerative diseases and are one of our main targets for clinical development.

A new exploratory Phase 2 data analysis presented at the AAIC 2018 showed that our lead product candidate crenezumab significantly reduces Abeta oligomers in cerebrospinal fluid in patients with Alzheimer’s disease. We are encouraged about crenezumab’s potential as a disease modifying therapy, particularly given its distinct differentiation from other beta-amyloid antibodies in terms of both target specificity and safety."

Key Financial Data – Unaudited (CHF million)

For the three months ended
September 30, For the nine months ended September 30,
2018 2017 2018 2017
(in CHF million except per share data) (in CHF million except per share data)
Total revenue 2.3 1.1 5.8 3.8

R&D expenses (11.5) (8.2) (32.2) (22.5)
G&A expenses (2.9) (2.5) (8.7) (7.0)

IFRS Loss for the period (13.5) (8.8) (36.3) (30.6)
IFRS Loss per Share – basic and diluted (0.21) (0.15) (0.61) (0.54)

Adjusted Loss for the period1 (11.6) (9.0) (33.3) (25.0)
Adjusted Loss Share – basic and diluted1 (0.18) (0.16) (0.56) (0.44)

1 Adjusted (Loss) and Adjusted Loss per Share are non-IFRS measures. See "Non-IFRS Financial Measures" below for further information and reconciliation to the most directly comparable IFRS measures.

As of
September 30, As of
December 31,

2018 2017 Change
(in CHF million)
Cash and cash equivalents 199.1 124.4 74.7
Total shareholder’s equity 192.0 116.8 75.2
Third Quarter 2018 Company Highlights

ACI-24 Vaccine for Alzheimer’s Disease
AC Immune has started the Phase 2 study with ACI-24 in patients with mild Alzheimer’s disease (AD). The aim of this double-blind, randomized, placebo-controlled study with an adaptive design is to assess the safety, tolerability, immunogenicity, target engagement, biomarkers and clinical efficacy of ACI-24. The trial will seek to confirm the positive trends on Abeta PET imaging and clinical measurement (CDR-SB) of the previous Phase 1 safety study. The Phase 2 trial will be conducted in several European countries and the first patients have been screened.

ACI-24 in Down Syndrome
AC Immune has completed recruitment for the high-dose cohort of the ACI-24 Phase 1b study for the treatment of Alzheimer’s disease-like characteristics in adults with Down Syndrome (DS), a condition affecting approximately one in 700 newborns. The first low-dose and the second high-dose cohorts have been fully recruited in August 2017 and in July 2018 respectively, and interim results of the low dose cohort are expected later in 2018. In addition to cognitive dysfunction beginning in childhood, individuals with DS are genetically-predisposed to develop Abeta-related cognitive decline at a much younger age and with much greater probability than the general population.

Closing of Three Primary Offerings for 10,000,000 Common Shares
In July, the Company completed three offerings, totaling 10,000,000 new common shares at a price per share of USD 11.75, from which the Company obtained gross proceeds of approximately USD 117.5 million (CHF 116.3 million). Net underwriting fees and transaction costs totaled CHF 6.8 million, yielding net proceeds of CHF 109.5 million.

Third Quarter 2018 Financial Highlights

Revenues
Our revenues fluctuate as a result of our collaborations with current and potentially new partners, the timing of milestone achievements, and the size of each milestone payment.

AC Immune generated revenues of CHF 2.3 million in the three months ended September 30, 2018, an increase of CHF 1.2 million over the comparable period in 2017. Contract revenues improved due to an incremental CHF 0.8 million for research and development services performed for the anti-pTau Vaccine (ACI-35) together with Janssen, CHF°0.2°million related to the TDP-43 PET Imaging Tracers Biogen collaboration and CHF 0.1 million for research services provided to Essex Bio-Technology. We also recognized CHF 0.1 million in grant revenue from the Michael J. Fox Foundation.

We recognized CHF 5.8 million in the nine months ended September 30, 2018, a CHF°2.0°million increase over the comparable period in 2017. Contract revenues improved principally due to increases of CHF 1.6 million for research and development services performed for the anti-pTau Vaccine (ACI-35) together with Janssen, CHF°0.5 million for research services provided to Essex Bio-Technology and CHF 0.5 million for research and development revenues from Biogen. The Company also recorded CHF 0.3 million in grant revenue from the Michael J. Fox Foundation. This was offset by a non-recurring CHF 1.1 million milestone in Q1 2017 from Life Molecular Imaging (formerly Piramal Imaging).

Research & Development (R&D) Expenses
For the three months ended September 30, 2018, AC Immune invested CHF 11.5 million in research and development, compared with CHF 8.2 million for the same period in 2017. The increase in R&D spending was primarily driven by investments in a variety of our programs. In our Alzheimer’s disease programs, this includes an incremental CHF 1.6 million for our anti-pTau Vaccine (ACI-35) program. The increase in our discovery programs of CHF 1.4 million was driven by a variety of projects including CHF 0.3 million related to the continued proof of concept studies and additional manufacturing activities of our lead compounds in the Tau Morphomers and a CHF 0.4 million increase related to manufacturing activities in our vaccine technology program.

For the nine months ended September 30, 2018, AC Immune invested CHF 32.2 million in research and development, compared with CHF 22.5 million for the same period in 2017. The increase in R&D spending was primarily driven by investments of CHF°3.8 million in our Alzheimer’s disease programs, specifically a CHF 1.2 million increase for our ACI-24 program in Alzheimer’s disease (AD) to start-up the Phase 2 study. We also invested an incremental CHF 2.8 million for our anti-pTau Vaccine (ACI-35) program. Importantly, we increased our investments in our Discovery programs by CHF°3.9 million, driven by a CHF 1.8 million increase for preparing the Phase 1 entry of our lead compounds in the Tau MorphomersTM program. Additionally, there were CHF°0.6 million increases related to our vaccine technology program and CHF°0.5°million for our anti-alpha-Synuclein antibody.

General and Administrative (G&A) Expenses
General and administrative expenses amounted to CHF 2.9 million in the three months ended September 30, 2018, compared with CHF 2.5 million in the same period in 2017. For the nine months ended September 30, 2018, and 2017, general and administrative expenses were CHF 8.7 million and CHF 7.0 million, respectively. The changes predominantly related to increases in personnel expenses.

IFRS Loss for the period
For the three months ended September 30, 2018, the Company had a net loss of CHF 13.5 million compared with net loss of CHF 8.8 million for the same period in 2017. The increased net loss for this three month period was partly attributable to the CHF 3.8 million increase in R&D and G&A expenses and CHF 2.2 million decrease in Finance result offset by the CHF 1.2 million in revenues additional revenues.

For the nine months ended September 30, 2018, the Company had a net loss of CHF 36.3 million compared with net loss of CHF 30.6 million for the same period in 2017. The increase in net loss for this nine month period was attributable to the increased spending of CHF 11.3 million in R&D and G&A expenses offset by gains in our Finance result of CHF 3.6 million and CHF 2.0 million in revenues.

Cash position
As of September 30, 2018, AC Immune had total cash and cash equivalents of CHF 199.1 million compared to CHF°124.4 million as of December 31, 2017. This CHF 74.7 million increase was principally due to the Company’s three follow on offerings which yielded a CHF 109.5 million in proceeds, after deducting underwriting fees and transaction costs. Net cash flows used in operating activities of CHF 32.3 million offset this cash increase, due to the higher investments in our major discovery and development programs, and the continued strengthening of the Company’s infrastructure, systems and organization as a publicly-traded company.

Non-IFRS Financial Measures
In addition to our operating results, as calculated in accordance with International Financial Reporting Standards, or IFRS, as adopted by the International Accounting Standards Board, we use Adjusted Loss and Adjusted Loss per Share when monitoring and evaluating our operational performance. Adjusted Loss is defined as loss for the relevant period, as adjusted for certain items that we believe are not indicative of our ongoing operating performance. Adjusted Loss per Share is defined as Adjusted Loss for the relevant period divided by the weighted-average number of shares for such period. The following table reconciles net loss to Adjusted Loss and Adjusted Loss per Share for the periods presented:

Reconciliation of Loss to Adjusted Loss and Loss Per Share to Adjusted Loss Per Share (unaudited)

Weighted-average number of shares used to compute Adjusted Loss per Share – basic and diluted 64,862,822 57,164,145 59,912,283 57,023,032

1 Reflects non-cash expenses associated with share-based compensation for equity awards issued to Directors, Management and employees of the Company.
This expense reflects the awards’ fair value recognized for the portion of the equity award which is vesting over the period.

2 Reflects foreign currency remeasurement gains and losses for the period, predominantly impacted by the change in the exchange rate between the US Dollar and the Swiss Franc.

Non-IFRS Expenditures
Adjustments for the three and nine months ended September 30, 2018, were CHF 1.9 million and CHF 3.0 million, respectively. These were largely due to foreign currency remeasurement losses of CHF 1.3 million and CHF 1.1 million, respectively, predominantly related to the cash balance of the Company as a result of a weakening of the US Dollar against the Swiss Franc for most of the third quarter. The Company also recorded CHF 0.6 million and CHF 1.9 million for the three and nine months, respectively, for share-based compensation expenses. The latter represented a CHF 1.0 million increase compared to the nine months ended September 30, 2017.

MEDIGENE REPORTS FINANCIAL & BUSINESS RESULTS FOR THE FIRST NINE MONTHS OF 2018

On November 13, 2018 Medigene AG (FSE: MDG1, Frankfurt, Prime Standard, SDAX), a clinical stage immuno-oncology company focusing on the development of T cell immunotherapies for the treatment of cancer, reported financial results for the first 9 months of 2018 and provided a review of recent accomplishments and anticipated upcoming milestones (Press release, MediGene, NOV 13, 2018, View Source [SID1234531242]). The company further improved its financial guidance for the fiscal year 2018.

Major events in the first three quarters of 2018:
– Start of a Phase I/II clinical trial with T cell receptor-modified T cell therapy (TCR-T) MDG1011 in blood cancers including Acute myeloid leukemia (AML), myelodysplastic syndrome (MDS) and multiple myeloma (MM)
– Expansion of TCR alliance with bluebird bio from four to six TCR projects
– Raise of EUR 32.3 million in oversubscribed private placement to new and existing investors
– Strengthened patent portfolio with new TCR patents in USA and Europe
– Presented data on the successful production of dendritic cell (DC) vaccines for the current Phase I/II clinical trial
– Collaboration with Structured Immunity on improved T cell receptor development

Update Immunotherapies
– Authority approves simplified criteria for patient recruitment in Phase I/II trial with TCR-therapy MDG1011: The German regulatory authority, the Paul-Ehrlich-Institut (PEI), has approved Medigene’s amendment of the trial inclusion criteria. Initial trial protocol required inclusion of one patient per indication (AML, MDS, MM) in a dose cohort of three patients. The adjusted trial protocol requires at least one patient with MM and at least one patient with either AML or MDS. The adjusted trial protocol enables more flexibility and potentially more rapid enrollment of patients. Moreover, an analytical method for determining PRAME expression has been optimized, which results in an increase in the number of potential patients for the clinical trial.
– Successful manufacturing of the first personalized cell product MDG1011: The first personalized MDG1011 cell product was successfully manufactured with patient-specific T cells in compliance with the clinical trial protocol in the course of the trial. A sufficient number of therapeutic TCR-modified T cells with autologous T cells were generated despite the advanced disease stage of the patient. However, the patient could not be treated with the therapeutic product because he dropped out of the trial beforehand due to rapid progression of the underlying disease.
– Preparations to increase the number of trial centers started: Medigene is undertaking intensive preparations with a number of additional hospitals in order to increase the number of centers to allow for an accelerated patient recruitment.

Prof. Dolores Schendel, CEO of Medigene AG, comments: "We are delighted to show that the manufacturing of our highly innovative product MDG1011 worked well with a patient’s own cells in our first-in-man and first-in-country trial with a TCR-modified T cell therapy. The modified study protocol and the expansion of the study centers will improve the general admission for the treatment of these critically ill patients. Our financials are on track and the guidance reflects our intensive research and development activities in the further development of our immunotherapies."

Nine months’ financial results:
– Total revenue increased by 11% to EUR 8.0 million
– Revenue from the core business of immunotherapies increased by 38% to EUR 4.7 million
– Research and development (R&D) expenses increased as planned by 20% to EUR 13.3 million due to extension of the preclinical and clinical development activities for immunotherapy programs
– EBITDA loss increased as anticipated by 5% to EUR 10.7 million
– Net loss increased by 14 % to EUR 12.2 million due to higher R&D expenses and currency effects
– Cash & cash equivalents and time deposits of EUR 76.3 million as at September 30, 2018
– Further improvement of the financial guidance 2018

Financial guidance 2018:
Medigene further improves the financial guidance for 2018 which was raised in the 6M financial statement:
– The Company continues to expect total revenue of EUR 9.5 – 10.5 million in 2018.
– Due to lower than estimated clinical trial costs in 2018, the company now expects to spend EUR 19 – 21 million for the full year 2018 (previous guidance: EUR 21 – 23 million).
– As a result, Medigene is expecting to make a loss at EBITDA level of EUR 16 – 18 million (previous guidance: EUR 18 – 20 million).
– Excluding the proceeds from the capital increase conducted in May 2018, Medigene forecasts a total cash usage of EUR 12 – 14 million for 2018 (previous guidance: EUR 15 – 17 million)
– This forecast does not include potential future milestone payments or cash flows from existing or future partnerships or transactions, as the occurrence of such events and their timing and amount depend to a large extent on external parties and therefore cannot be reliably predicted by Medigene.
– Based on its current planning, the Company has sufficient financial resources to fund business operations beyond the planning horizon of two years.

Outlook immunotherapies:
T cell receptor-modified T cells (TCR-Ts)
The Company is planning to commence treatment of the first dose cohort in the Phase I/II clinical trial of Medigene’s TCR-T MDG1011 therapy for acute myeloid leukemia (AML), myelodysplastic syndrome (MDS) and multiple myeloma (MM). Phase I focuses on the safety and tolerability of the treatment with MDG1011.
In addition to the MDG1011 clinical trial, Medigene will also work on characterizing new TCR candidates for future Medigene-sponsored clinical trials and collecting preclinical data to prepare applications for further clinical TCR-T trials. In addition, Medigene will continue its successful and expanded collaboration with bluebird bio and expects to make further progress on TCR candidate discovery.

Dendritic cell vaccines (DCs)
Medigene continues its ongoing Phase I/II clinical trial with the DC vaccine to treat acute myeloid leukemia (AML). Data from all patients over a treatment duration of one year is expected in the fourth quarter of 2018. This corresponds to the half-way point of the full treatment period. This interim analysis is planned to be presented at scientific conferences in 2019. The final clinical data from the Phase I/II trial are expected at the conclusion of the two-year treatment for all patients towards the end of 2019.

The full version of the quarterly statement 9M-2018 can be downloaded here: www.medigene.com/investors-media/reports-presentations/

Conference call and webcast: A telephone conference (webcast) in English will be held today at 3:00 pm CET (Munich/Frankfurt) / 9:00 am EST (New York) and transmitted live via webcast. Access and transmission of the synchronized presentation slides and a recording of the presentation is available on the homepage of Medigene at www.medigene.com/investors-media/reports-presentations/webcasts/

Evotec AG reports first nine-month 2018 results and corporate updates

On November 13, 2018 Evotec AG (Frankfurt Stock Exchange: EVT, MDAX/TecDAX, ISIN: DE0005664809) reported financial results and corporate updates for the first nine months of 2018 (Press release, Evotec, NOV 13, 2018, View Source;announcements/press-releases/p/evotec-ag-reports-first-nine-month-2018-results-and-corporate-updates-5747 [SID1234531238]).

SIGNIFICANT UPSWING IN FINANCIAL PERFORMANCE
Group revenues: 57% increase to € 270.0 m (9M 2017: € 171.5 m);
EVT Execute revenues up 53% to € 254.3 m (9M 2017: € 165.8 m);
EVT Innovate revenues up 55% to € 51.3 m (9M 2017: € 33.2 m)
Adjusted Group EBITDA up 77% to € 68.7 m (9M 2017: € 38.9 m);
Adjusted EBITDA for EVT Execute of € 62.1 m (9M 2017: € 41.4 m);
Adjusted EBITDA for EVT Innovate of € 6.6 m (9M 2017: € (2.5) m)
Group R&D expenses increase of 67% to € 20.9 m (9M 2017: € 12.5 m) following acquisition of infectious disease unit Evotec ID (Lyon)
Very strong performance in Q3 2018 due to growth in base business, Aptuit contribution, and significant milestone achievements
Strong liquidity position of € 168.6 m even after 50% (€ 70 m) repayment of acquisition loan

EVT EXECUTE – DELIVERING
Clinical Phase I and Phase II starts and good progress within ongoing alliances (e.g. Bayer endometriosis/chronic cough alliance)
Signing of multiple new and extended drug discovery and development agreements (e.g. CHDI, Novo Nordisk, Ferring (after period-end))
New contracts and increased demand for INDiGO solutions and development services (e.g. Ankar, Astex, Inflazome, Yumanity)
Strong performance across all business and service lines (e.g. high-throughput ADME-tox testing at Cyprotex, an Evotec company)

EVT INNOVATE – "JUST THE BEGINNING…"
Two new strategic long-term partnerships with Celgene in oncology (upfront payment: $ 65 m) and targeted protein degradation (financials undisclosed)
Acquisition of Evotec ID (Lyon) creating largest global footprint in infectious disease capabilities with established project pipeline; upfront payment of € 60 m and R&D cost coverage for the first five years
Important milestone achievements in iPSC-based alliances (diabetes alliance with Sanofi, neurodegeneration alliance with Celgene) and further expansion of iPSC platform
Academic BRIDGE model growing (e.g. selection of funded projects under LAB282, LAB150 and LAB591; initiation of French BRIDGE LAB031 with Sanofi)
Participation in additional financing rounds of Forge Therapeutics, FSHD Unlimited, and Topas Therapeutics

CORPORATE
Conversion into European Company (SE) on track
Change in Management Board as of 01 January 2019: Appointment of Dr Craig Johnstone as new COO; Dr Mario Polywka retiring from Evotec
Evotec share listed in MDAX and STOXX Europe 600

GUIDANCE 2018 CONFIRMED
All elements of the financial guidance confirmed

1. SIGNIFICANT UPSWING IN FINANCIAL PERFORMANCE

Evotec’s Group revenues for the first nine months of 2018 grew to € 270.0 m, a significant increase of 57% compared to the same period of the previous year (9M 2017: € 171.5 m, restated). This increase is due to a strong performance in the base business, the positive Aptuit contribution (Jan-Sep 2018: € 83.6 m) as well as increased milestone achievements in existing alliances. The total revenues from milestones, upfronts and licences for the first nine months of 2018 amounted to € 27.2 m and increased by 29% over the same period of the previous year (9M 2017: € 21.1 m). In the first nine months of 2018, the gross margin was 31.0% (9M 2017: 34.8%), reflecting a new business mix with different margin expectations following the acquisition of Aptuit, higher amortisation of intangible assets and adverse FX effects. Gross margin excluding total amortisation of acquisitions amounted to 34.3%.

Q3 2018 delivered a very strong financial performance. Group revenues increased by 43% to € 96.3 m (Q3 2017: € 67.2 m), following growth in the base business, the Aptuit contribution and strong milestone achievements. The significant milestone achievements are reflected in the gross margin of Q3 2018 of 34.7% (Q3 2017: 33.4%). Q3 2018 gross margin excluding total amortisation amounted to 37.7% (Q3 2017: 34.6%). In Q3 2018, an income from bargain purchase of € 15.4 m (Q3 2017: € 0 m) was recorded for the acquisition of Evotec ID (Lyon) as the purchase price was below the net assets required. This one-time effect in 2018 was not allocated to segments and does not impact the adjusted EBITDA. The purchase price allocation is still preliminary. The adjusted Group EBITDA increased from € 12.7 m in Q3 2017 to € 30.1 m in Q3 2018.

Group R&D expenses for the first nine months of 2018 increased as expected by 67% to € 20.9 m (9M 2017: € 12.5 m) mainly following the cost of new strategic efforts in infectious diseases through the acquisition of Evotec ID (Lyon). The additional ID-related R&D expenses are covered by other operating income in context of the new agreement with Sanofi. Furthermore, R&D expenses in the first nine months of 2018 focused on initiatives in the field of iPSC research, R&D platforms as well as academic BRIDGEs. SG&A expenses for the first nine months of 2018 increased as expected by 39% to € 40.8 m (9M 2017: € 29.3 m) mainly due to the additional expenses of Aptuit and Evotec ID (Lyon), an increased headcount in response to the overall Company growth as well as M&A-related expenses. Q3 2018 SG&A expenses remained on a similar level as in prior quarters following the Aptuit acquisition in August 2017.

In the first nine months of 2018, Evotec recorded impairments of intangible assets of € 4.2 m in total (9M 2017: € 1.2 m), following the full impairments of the EVT770 programme (€ 4.0 m) and of the developed assets within the Panion joint venture (€ 0.2 m). At the same time, correlated earn-out accruals of € 2.3 m were relieved under other operating income, which is a counter-effect to the impairment.

Evotec’s adjusted Group EBITDA in the first nine months of 2018 significantly increased by 77% to € 68.7 m (9M 2017: € 38.9 m). Evotec’s operating result for the first nine months of 2018 amounted to € 59.5 m (9M 2017: € 25.5 m). The net result in the first nine months of 2018 increased to € 52.3 m (9M 2017: € 12.7 m).

Liquidity, which includes cash and cash equivalents (€ 135.1 m) and investments (€ 33.5 m) amounted to € 168.6 m at the end of September 2018 (31 December 2017: € 91.2 m) and remained very strong even after the repayment of 50% (€ 70 m) of the Aptuit acquisition loan in the first nine months of 2018. In the first nine months of 2018, Evotec participated in further financing rounds of Forge Therapeutics, FSHD Unlimited, and Topas Therapeutics.

In the first nine months of 2018, revenues from the EVT Execute segment amounted to € 254.3 m, an increase of 53% compared to the same period of the previous year (9M 2017: € 165.8 m). This increase is attributable to the significant upswing in the base business and the Aptuit contribution for the first nine months of 2018. Included in this amount are € 35.6 m of intersegment revenues (9M 2017: € 27.4 m). The EVT Execute segment recorded a gross margin of 24.6% (9M 2017: 28.7%). The drivers behind this change in gross margin are the same drivers affecting the Group gross margin. In the first nine months of 2018, the EVT Execute segment recorded a significant increase of its adjusted EBITDA of 50% to € 62.1 m against the prior-year period (9M 2017: € 41.4 m).

In the first nine months of 2018, the EVT Innovate segment generated third-party revenues of € 51.3 m (9M 2017: € 33.2 m). This 55% increase in EVT Innovate revenues resulted from signing of new partnerships and milestone achievements in key alliances. The EVT Innovate segment reported a gross margin of 48.8% compared to 46.2% in the prior-year period. R&D expenses for EVT Innovate increased from € 15.3 m in the first nine months of 2017 to € 24.1 m in the first nine months of 2018, the increase mainly resulting from the new efforts in infectious diseases in Lyon. The significant growth of revenues and improved margins of the EVT Innovate segment resulted in a positive adjusted EBITDA of € 6.6 m (9M 2017: € (2.5) m).

2. EVT EXECUTE & EVT INNOVATE
EVT EXECUTE
The EVT Execute segment achieved strong progress in existing alliances and signed and started new and expanded established alliances (e.g. CHDI, Novo Nordisk, Ferring (after period-end)). In the multi-target alliance with Bayer, further promising small molecules for the treatment of endometriosis advanced into Phase I and for the treatment of chronic cough into Phase II. Since the beginning of the collaboration in 2012, six first-in-class/best-in-class pre-clinical candidates have been generated, from which three programmes have progressed into Phase I/Phase II clinical trials.

The Aptuit integration into the Evotec Group is on track. In the first nine months of 2018, Evotec was able to sign various new INDiGO agreements with Ankar, Astex, Carna Biosciences, Inflazome, and Yumanity, among others. The INDiGO offering, an integrated and highly efficient process to IND submission, was part of the strategic rationale behind the Aptuit acquisition and was launched by Evotec in March 2018. In addition, Aptuit’s stand-alone development services and integrated CMC continued to deliver and sign new programmes. The high-throughput ADME-tox testing business of Cyprotex (acquired in December 2016) continued its excellent performance of the previous quarters.

EVT INNOVATE
In the first nine months of 2018, the EVT Innovate segment gained significant momentum through signing new deals and achieving critical milestones, resulting in a very strong performance and excellent scientific progress of the segment.

Two new strategic, long-term partnerships were forged with Celgene in the first nine months of 2018. Evotec’s new partnership with Celgene in oncology (initiated in May 2018; upfront payment of $ 65 m) leverages Evotec’s phenotypic screening capabilities and unique compound libraries as well as associated target deconvolution capabilities. Evotec’s third partnership with Celgene is focused on targeted protein degradation (initiated in September 2018; undisclosed upfront payment) which allows the pursuit of high-value drug targets via a novel mechanism of action, which previously have been ‘undruggable’ targets. In this field, Evotec is leveraging in particular its proprietary Panomics and PanHunter platforms.

Furthermore, effective 01 July 2018, Evotec acquired Sanofi’s infectious disease unit in Lyon, triggering an upfront of € 60 m (€ 42 m in cash plus € 18 m cash of the acquired company). This acquisition provides Evotec with the largest global footprint in infectious disease capabilities in the industry and a broad pipeline of drug candidates and discovery projects.

Evotec’s partnered programmes are progressing well as demonstrated by significant milestone achievements in its strategic iPSC alliances with Sanofi in the field of diabetes (TargetBCD) and with Celgene in neurodegeneration. Evotec continues to place great emphasis on the expansion and development of its iPSC platform and patient-centric approaches to drug discovery.

In addition, Evotec’s academic BRIDGE model continues to attract significant interest from academia and industry partners. LAB031, the first French BRIDGE, was formed in October 2018 (after period-end) in partnership with Sanofi. Evotec’s existing BRIDGEs LAB282, LAB150 and LAB591 also recorded progress with projects selected for future activities in the course of the first nine months of 2018.

3. CORPORATE
CONVERSION INTO EUROPEAN COMPANY (SE) ON TRACK
Mandatory negotiation processes with a Special Negotiation Board (SNB) are ongoing regarding the future arrangements for employee involvement, after which Evotec AG will be transferred into Evotec SE with the registered seat and headquarters remaining in Hamburg, Germany.

CHANGE IN MANAGEMENT BOARD AS OF 01 JANUARY 2019: APPOINTMENT OF DR CRAIG JOHNSTONE AS NEW COO; DR MARIO POLYWKA RETIRING
Following the departure of Dr Mario Polywka as Evotec’s COO effective 31 December 2018, the Supervisory Board of Evotec will appoint Dr Craig Johnstone as its new Chief Operating Officer and member of the Management Board, effective 01 January 2019. Dr Johnstone is a successful drug discovery leader with over 20 years’ experience. Dr Johnstone joined Evotec in May 2012 as SVP Drug Discovery and Innovation Efficiency and was appointed Directeur General and Site Head, Evotec France, in April 2015. In January 2017, he was appointed Global Head, Integrated Drug Discovery at Evotec. Between 1994 and 2012, Dr Johnstone served in a number of projects, functions, matrix and leadership roles at AstraZeneca, Prosidion and Rapier Research. He holds a BSc in Chemistry and a PhD in organic and organometallic synthesis and has published more than 70 patents.

Dr Werner Lanthaler, Chief Executive Officer of Evotec, commented: "On behalf of the Management Board and the Company, I would like to sincerely thank Mario for his outstanding contributions, strong commitment to the Company and very valuable insights, which helped Evotec to become the leader in external innovation. He has been an essential part of our Management Team and we are very thankful for him being such a passionate force driving Evotec’s development. We will closely stay in touch with him and we wish him all the best for all of his future endeavours, amongst others remaining a consultant to Evotec. Moreover, I am delighted to welcome Craig to our team as new Chief Operating Officer."

ISA Pharmaceuticals´ Chief Scientific Officer Prof. Cornelis Melief Receives ESMO Immuno-Oncology Award 2018

On November 13, 2018 ISA Pharmaceuticals B.V., a clinical-stage immuno-oncology company, reported that its Chief Scientific Officer Prof. Cornelis Melief has been selected by the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) to receive the 2018 ESMO (Free ESMO Whitepaper) Immuno-Oncology Award in recognition of his life’s work in studying the interactions of the immune system with cancer (Press release, ISA Pharmaceuticals, NOV 13, 2018, View Source [SID1234531236]). He will receive the award during an official ceremony at the opening keynote and award lecture of this year’s ESMO (Free ESMO Whitepaper) Immuno-Oncology Congress in Geneva, Switzerland, on December 13, 2018 (01:30-01:45 pm CET, Hall A2 – Room A). The title of his lecture will be "Combination immunotherapy of cancers caused by high risk human papilloma virus".

Prof. Melief will be the second recipient of the ESMO (Free ESMO Whitepaper) Immuno-Oncology Award, which was created in 2017 in commemoration of European cancer research and treatment pioneer Prof. Georges Mathé, a founding member of ESMO (Free ESMO Whitepaper).

In addition to his role at ISA Pharmaceuticals, Prof. Melief is Professor Emeritus in tumor immunology at the Leiden University Medical Center in the Netherlands. He focuses on the development of effective immunotherapies for virus-induced tumors and has created the concept of synthetic long peptide (SLP) vaccines for the treatment of cancer patients. Prof. Melief and his team were able to show the clinical effectiveness of these therapeutic vaccines in patients with pre-malignant lesions caused by Human Papilloma Virus type 16 (HPV-16).

Among the most promising results obtained to date, Melief and his team found that a combination of SLP vaccination and standard chemotherapy strengthened cervical cancer patients’ immune response and prolonged their survival. They further discovered that a similar effect could be achieved among patients with HPV-related head and neck cancer by administering the vaccines in conjunction with immunotherapy in the form of immune system boosting monoclonal antibodies.

Prof. George Coukos and John Haanen, Scientific Co-Chairs of the upcoming congress, outlined the reasons for nominating Cornelis Melief:

"Professor Melief dedicated his career to understanding how the immune system, specifically cytotoxic lymphocytes, interact with cancer, and used this knowledge for the development of new therapeutic cancer vaccine strategies," said Coukos.

"With this award, we are recognizing him as a true pioneer in the field of cancer immunology, who has trained and inspired a whole generation of young scientists with his research," Haanen added.

"This is a great honor and a wonderful recognition of the fact that after many years of concept building and evaluation in lab models and investigational trials, we have finally arrived at immunotherapy approaches that can make a difference for patients," said Prof. Cornelis Melief. "To me, this award also means recognition of the outstanding teamwork delivered by talented investigators at Leiden University Medical Center and ISA Pharmaceuticals as well as by many medical oncologists in the Netherlands, Belgium and the USA."