Evotec brightens its outlook after $286M Sanofi deal

Evotec, a German company that straddles the line between CRO and biotech, rode its innovative model to revenue growth in the first quarter, raising its expectations for 2015 after signing an expansive deal with Sanofi.

The company splits its time between carrying out R&D on behalf of its clients and developing in-house assets with an eye on licensing them out. EVT Execute, Evotec's CRO division, posted a 21% revenue increase in the first quarter, pulling in €23.1 million ($26.4 million). EVT Innovate, devoted to developing and spinning out R&D projects, brought in €3.8 million ($4.3 million), beating a net loss in the same period in 2014.

And the growing company trimmed its quarterly loss from €4 million ($4.6 million) in 2014 to €1.1 million ($1.2 million) in the first quarter.

Now, thanks in part to a deal with Sanofi that will expand Evotec's business and give it €250 million ($286 million) over 5 years, the company is raising its full-year growth expectations to 35% over 2014, lifting its previous guidance of a 20% jump. Notably, that figure does not include potential milestone, upfront and licensing payments.

Beyond the balance sheet, the Sanofi deal promises to accelerate Evotec's novel approach to R&D. Through the partnership, Evotec is getting a new research outpost, a slew of new employees and a big boost to one of its most prized assets. Evotec's novel model relies in part on screening its clients' disease targets against a sizable library of chemical compounds, and, under the Sanofi agreement, the French drugmaker is handing its own compound library en masse to Evotec, creating a combined pool of roughly 1.7 million potential drugs.

Meanwhile, the company is keeping the pace with EVT Execute, working through risk-sharing deals with the likes of Boehringer Ingelheim and Roche ($RHHBY) while scouting for new partners.

- read the results