Evotec: Between Pressure to Transform and Pipeline Hope
As expected, the first quarter was weak for the Hamburg-based drug discovery company. With revenue of EUR 156.6 million, the company was down about 22% from the previous year, and adjusted EBITDA slipped to a loss of EUR 21.9 million. In the same quarter last year, a one-time license sale had boosted the figures. This was compounded by currency effects and subdued demand in the early-stage research market. Management is nevertheless sticking to its full-year forecast. The second half of the year is expected to be significantly stronger, driven by market recovery and internal efficiency gains.
With the “Horizon” program, Evotec is undertaking a fundamental realignment. EUR 75 million in restructuring expenses were already set aside in the first quarter for severance payments and impairments. The number of locations is set to shrink further from 14 to 10, with up to 800 jobs being cut. By the end of 2027, the company aims to achieve annual cost savings of around EUR 75 million. At the same time, Morgan Stanley and Moelis are reviewing the group’s structure, including its portfolio and capital, as well as ownership issues. Activists such as MAK Capital are pushing for a spin-off of the Biologics subsidiary.
The executive suite has been reshuffled. Claire Hinshelwood took over the finance division from Paul Hitchin in May, while Ingrid Müller assumed responsibility for operations. Both are tasked with advancing the Horizon implementation. There are operational bright spots. With Almirall, a preclinical candidate in dermatology was reached after just two years—significantly faster than is typical in the industry. The Gates Foundation increased its funding for tuberculosis research. Additionally, proceeds from the Tubulis exit are expected in the second quarter, with approximately USD 100 million coming from Gilead. The second half of the year will reveal whether the turnaround is successful. The stock is currently trading at around EUR 4.658.
BioNxt Solutions: Patents and a Bid for the Billion-Dollar Market
Anyone wondering how to repackage established active ingredients will find an interesting candidate in BioNxt Solutions. The Canadian company has based its research and GMP production in Germany, more specifically, in Uttenweiler, where Vektor Pharma TF GmbH was acquired in 2019. Its core competency lies in Oral Dissolvable Film (ODF), sublingual drug films that dissolve under the tongue, thereby bypassing the gastrointestinal tract. The company has secured its intellectual property rights. A European Unitary Patent (EP4539857) covers 18 countries, supplemented by a Eurasian patent for 8 countries. A US fast-track procedure is underway. Instead of relying on entirely new molecules, BioNxt reformulates already-approved active ingredients. This is a pragmatic approach with calculable risks.
The semaglutide ODF program is entering the active development phase. Together with its German partner Gen-Plus, BioNxt is working on a GLP-1 active ingredient film—the same class of substances behind Ozempic and Wegovy. The market for these peptide therapies is estimated to exceed USD 250 billion by 2034. The company aims to offer a needle-free, patient-friendly alternative to injections. The first phase involves 6–9 months of formulation work and proof-of-concept studies. In parallel, preparations are underway for the human bioequivalence study with cladribine (BNT23001) for multiple sclerosis. This is the most important milestone in the flagship program.
BioNxt is looking beyond known indications. The company is evaluating the use of its thin-film technology for psychedelic active ingredients. This is driven by growing regulatory momentum in the US and Europe. The company already has its own library of novel molecules, and a patent application has been filed. The goal is precise dosing and controlled effects, both of which are critical for mental health conditions such as PTSD or depression. Commercially, the company is focusing on partnerships rather than its own expensive distribution channels. An initial non-binding letter of intent for licensing in the Eurasian region has been signed. This reduces the need for financing, but a large portion of the value creation goes to partners. The share is currently trading at around CAD 0.39.
Merck: More Than Just Keytruda
The New Jersey-based pharmaceutical giant is in the midst of the most challenging chapter in its recent history: the megablockbuster patent for Keytruda expires in 2028. But anyone who focuses solely on this risk factor overlooks the fundamental realignment. Over the past 18 months, Merck has set the course for the post-patent era with acquisitions such as Cidara for USD 9.2 billion and Terns for USD 6.7 billion, as well as a partnership with Daiichi Sankyo.** The pipeline includes over 20 advanced drug candidates, which together are expected to generate more than USD 70 billion in revenue. According to management, the company is even ahead of schedule, as some study results came in a year earlier than expected.
Particularly exciting is the TROP2-ADC sac-TMT from the Kelun Biotech collaboration. In the Phase 3 OptiTROP-Lung05 study, the combination with Keytruda demonstrated clinically relevant benefits in lung cancer. Management is convinced that a competitor’s EVOKE-03 study cannot be applied to this molecule. In addition, there are three further ADCs from the Daiichi partnership, including I-DXd with a PDUFA date in October for small-cell lung cancer, an indication with a five-year survival rate of just 4%. Added to this is the HIV combination of islatravir and lenacapavir, which has been successfully tested in two Phase 3 studies and, as a weekly pill, is easily manageable in daily life.
The current valuation leaves room for upside. While the Cidara acquisition is weighing on profits in the short term—the adjusted loss of USD 1.28 per share in Q1 2026 is a one-time charge—Goldman Sachs, UBS, and Bank of America have recently raised their price targets to USD 120–130. Analyst opinions are predominantly positive. 47% have even assigned a “Strong Buy” rating. Those who understand the pipeline value see a company actively shaping the difficult transition. The revenue forecast stands at just under USD 67 billion for 2026, and the company is working on a long-term growth story beyond Keytruda. The dividend currently stands at USD 0.85 per share, and one share currently costs around USD 119.09.
Evotec is struggling with restructuring costs and weak demand, but the Horizon program could bring about change. BioNxt Solutions is addressing the billion-dollar market for semaglutide with its patent-protected sublingual drug films, thereby ensuring calculable risks. Merck is actively navigating the difficult post-Keytruda transition; thanks to a strong ADC pipeline and acquisitions, analyst price targets are as high as USD 130. While Evotec and BioNxt are on the right track, Merck already offers stability with potential.
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