EVOTEC

Karsten Henco and colleagues at the University of Hamburg founded Evotec in 1993 around a proprietary fluorescence spectroscopy technology for drug compound screening. The original technology — called Confocal Fluorescence Intensity Distribution Analysis — could test thousands of drug candidates in a fraction of the time conventional methods required.

They went public on the Frankfurt Stock Exchange in 1999, during the biotech boom, and used the capital to build a contract drug discovery business. Werner Lanthaler joined as CEO in 2009 and transformed the company from a tools provider into something much more interesting: a genuine R&D partner that co-owns the drugs discovered through its platform.

Evotec operates what they call a shared R&D infrastructure model. Pharmaceutical and biotech companies outsource their early drug discovery work to Evotec instead of running their own labs.

Evotec charges service fees for this work. But here is the interesting part: increasingly, instead of just charging fees, Evotec takes co-ownership stakes in the drug candidates discovered through their platform.

If a drug discovered on Evotec's platform eventually reaches patients, Evotec collects milestones and royalties. They call this the EVOequity model.

It turns a contract research business into a drug pipeline accumulation business. The downside is it makes the company very hard to value in the short term, because the assets are future drug royalties that may or may not materialise over 10-15 years.

EVOpanOmics — their AI and multi-omics drug discovery platform that integrates genomics, proteomics, and clinical data to identify drug targets and candidate molecules. Just-Evotec Biologics — their biologics manufacturing arm based in Seattle, designed to provide flexible clinical and commercial manufacturing for antibody-based drugs.

Their disease area partnerships cover oncology, neurological diseases, metabolic diseases, infectious diseases, and rare diseases. They have co-ownership stakes in hundreds of drug programs across these areas.

The Lanthaler era (2009-2023) was defined by acquisition of scientific capabilities across Europe. Evotec bought biology labs in Oxford, protein science operations in Lyon, and built manufacturing capacity in Seattle.

The strategy was to become the most capable outsourced drug discovery platform in the world, so that any pharma company wanting to do serious early-stage R&D would come to Evotec rather than build their own infrastructure. The big unlock was convincing large pharma companies to enter multi-year foundational research partnerships — not just transaction-by-transaction project work.

Partnerships with Bayer (oncology), Novo Nordisk (diabetes and obesity), and Bristol-Myers Squibb validated that model at scale.

Two things nearly killed the Lanthaler-era strategy. First, the complexity problem: the EVOequity model meant Evotec was accumulating potential drug assets with payoffs 10-15 years away, while also trying to grow revenues and profits today.

Investors found this impossible to value, which contributed to the stock falling over 80% from its 2021 highs. Second, the governance problem: in 2023, activist investor Apeiron Investment Group pushed hard for leadership changes, arguing the company had become too complex and too focused on long-term bets at the expense of near-term performance.

Werner Lanthaler resigned under this pressure. The company has been restructuring since.

As a publicly listed company on both the Frankfurt Stock Exchange and NASDAQ, Evotec's major shareholders include Novo Holdings (the Novo Nordisk Foundation's investment arm, which took a significant strategic stake reflecting its partnership interests), BlackRock, and various institutional asset managers. Apeiron Investment Group became a significant and vocal shareholder in 2023, successfully pushing for leadership changes.

The company has a history of strategic shareholders who are also commercial partners — which creates alignment but also complexity.