Evotec's Strategic Crossroads: Activist Pressure Meets a Costly Transformation

Evotec navigates activist demands for a spin-off of its profitable biologics unit while funding a major restructuring amid forecasted revenue decline and a key asset sale.

The German drug discovery firm Evotec SE finds itself at a pivotal juncture, caught between activist investor demands for radical change and the costly reality of executing a deep internal restructuring. While a significant cash infusion from a stake sale provides near-term relief, the company's leadership faces a challenging year defined by declining revenue and pressure to unlock value.

Leading the charge for change is activist investor MAK Capital, which holds approximately 7.0% of Evotec's shares. Frustrated by the stock's severe underperformance—shares closed at €4.53 recently, down over 18% year-to-date and roughly 46% below its 52-week high of €8.32—the investor is pushing for a spin-off of the profitable U.S. biologics unit. MAK Capital argues that a separate U.S. listing for Just-Evotec Biologics could achieve a valuation exceeding one billion euros, providing fresh capital and broadening the investor base.

This demand highlights a stark divergence within Evotec's business segments. The company's traditional core, Discovery & Preclinical Development, continues to struggle with market headwinds, posting a 13.5% revenue decline recently. In sharp contrast, the Just-Evotec Biologics unit has become the sole growth engine, boosting its revenue by 39% to €259.4 million and standing as the company's only profitable division.

Financially, Evotec is navigating a transition year. The company reported solid 2025 results, with group revenue of €788.4 million and adjusted EBITDA of €41.1 million, at the upper end of its guidance. A strong fourth quarter, where revenue rose 14% to €253.3 million and adjusted EBITDA doubled to €58.0 million, was aided by one-time effects and partnerships with firms like Bristol Myers Squibb and Bayer.

The outlook for 2026, however, is more difficult. Management forecasts group revenue between €700 million and €780 million, which at the low end represents a decline from 2025. Adjusted EBITDA is projected to be between €0 and €40 million. The heavy costs of the "Horizon" restructuring program, estimated at around €100 million in cash outlays, will weigh on the balance sheet before the anticipated benefits materialize in the second half of the year.

This financial pressure is partially offset by a timely windfall. The sale of Evotec's 3.14% stake in Tubulis GmbH to Gilead Sciences is set to close in the second quarter of 2026. The transaction, valued at $3.15 billion in cash, will deliver an upfront payment of approximately $100 million to Evotec, with potential milestone payments adding up to another $58 million.

The "Horizon" restructuring itself is a profound overhaul. The plan involves reducing Evotec's sites from 14 to 10 by the end of 2027 and cutting approximately 800 positions, mostly within the current year. The program aims to deliver annual cost savings of about €75 million.

All these strategic and financial threads will converge at the annual general meeting on June 11, 2026, in Hamburg. Shareholders are expected to elect pharmaceutical veteran Dieter Weinand, formerly of Bayer, Pfizer, and Bristol Myers Squibb, as the new supervisory board chairman. His appointment is seen as a move toward a more commercially focused strategy. This meeting will also serve as a critical forum for management to address MAK Capital's proposals and present a convincing mid-term plan to regain investor confidence.