Evotec makes 'strategic exit' from gene therapy as part of wider shake-up

A month after Evotec first alluded to a “strategic reset” to rebalance the company, the German biotech has revealed the end of its gene therapy aspirations.

The “strategic exit” from the gene therapy space is designed to “bring the focus on the company’s core modalities,” Evotec explained in a first-quarter earnings release. This will involve closing the company’s site in Orth an der Donau, Austria, which operates under the Evotec Gene Therapy banner.

Around 40 employees are based at the site who, according to the company’s website, “cover the full spectrum of services for end-to-end gene therapy development.” Evotec is “working closely with all stakeholders to minimize the impact” on these employees.

Evotec, which offers drug development services to all 20 of the largest pharmas as well as hundreds of biotech clients, first hinted at major changes to “rightsize our operational and corporate structure” last month. At the time, Interim CEO Mario Polywka said the company’s “central focus for 2024 is to protect our strong balance sheet and refocus the company on profitable growth.”

The major change unveiled in April was a consolidation of reporting structures, but more alterations were hinted at. Losing the gene therapy business means removing a business segment that offered a range of services to biopharma clients, including the design of viral AAV vectors for various therapeutic payloads, generating AAV material for research and non-clinical studies, in vitro and in vivo proof of concept studies for target validation, as well as conducting non-clinical gene therapy studies.

The decision was probably shaped by what Evotec described as a “challenging” first quarter. The company used the “c” word again to describe the current market for transactional businesses, which it blamed for shared R&D revenues dropping by 23% to 155.2 million euros ($168.1 million) in the first quarter of the year.

Despite this, the company continued to chalk up some big-name partnerships, including receiving a $25 million payment from Bristol Myers Squibb to dive deeper into their neuroscience collaboration.