Ladies and gentlemen, welcome to the Evotec SE quarterly statement 9M 2025 Conference Call. I'm Lorenzo Tecorus, call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. You can register for questions at any time by pressing STAR and 1 on your telephone. For operator assistance, please press STAR and 0. The conference must not be recorded for publication or broadcast at this time. It's my pleasure to hand over to Volker Braun, Head of IR and ESG. Please go ahead, sir. Thank you, Lorenzo, and good morning. Good afternoon to all of you in this call. We have a lot to cover today and I'll keep my part very short, so let's move on to cover the housekeeping items on page two. We share the cautionary language here as. As usual, some statements will be future looking based on information available today and they might be subject to change in future. Now let me hand over to our CEO, Dr. Christian Wojczewski. Christian, please. Thank you, Volker. Good morning and good afternoon to everyone. It's a pleasure to welcome you all to this call. I'm looking forward to taking you through the progress we've made over the past six months of transition since the announcement of our new strategy. Very pleased with the momentum and high speed of our transformation toward better monetizing our technology leadership. The steps we've taken in the past couple of quarters are a strong fundament for our value creation path and for the execution of our midterm outlook. I'm confident that this will become more visible to you while we lead you through this presentation. Let us now take a closer look at the year to date performance. In the first nine months, group revenues landed at EUR 535.1 million, which is a 7% decline versus the previous year. This is driven by our DNPD business where we face continued softness in the early drug discovery market leading to 12% revenue decline. In contrast, our biologics business, JAP, remains on a strong growth path with plus 11% growth in the first nine months. As mentioned in the last call, we expect the trend in DNPD to continue in the second half of 2025, while for Just - Evotec Biologics, we anticipate revenue growth to further accelerate. Taking a closer look into the DNPD business, we see several main elements driving past and future performance. Talking about the early drug discovery market environment, the VC funding for biotech is certainly not yet favorable, affecting the business development activities of the transactional service business. However, over the last two quarters, the number and value of proposals going out from Evotec to customers is clearly trending upward, indicating that the business is stabilizing. Also, the level of negative change order volumes in Q3 has substantially improved versus the first two quarters of Q4. In the meanwhile, we've taken appropriate actions to adjust our cost base. We've introduced a new organization structure and we're strengthening our commercial and operational capabilities. Twelve months ago we were targeting EUR 30 million of cost out. In 2025 we raised the bar. Over the course of the year and during the last call we committed to EUR 60 million of cost out and we will stay ahead of plan. As announced last call, we're working on delivering an additional EUR 50 million of cost out and productivity measures in future. You should expect a full update on the initiatives we're working on during our next call. The business momentum with strategic partnerships remains healthy, ensuring continued mid term revenue streams. Those strategic partnerships are expected to also result in meaningful progression of our asset portfolio over the next six to nine months. Several catalysts lie ahead of us leading to the transition of molecules from the early drug discovery stage into preclinical and from preclinical into clinic and I'm pleased to announce today that we're expecting up to four molecules from our partnered asset pipeline to be in phase two clinical studies in 2026. This is exciting news for Evotec as it demonstrates the scientific strength and the outstanding capability of our technology and it underpins our plan to generate meaningful upside to milestone and royalty payments in future. More about this a bit later at Just - Evotec Biologics. We're making great progress in our efforts to diversify and broaden our customer portfolio. Business development within non-Sandoz and non-DOD business is moving fast. The momentum for this part of the business has further accelerated versus half year results to now over 100% growth after nine months. Moreover, we signed a transformational deal between Just - Evotec Biologics and Sandoz just hours ago. This landmark transaction is a strong testament to our cutting edge technology and capabilities in the fast growing biologics business. It will unlock payments of more than $650 million over the next years. In addition, we expect to generate sizable revenues from royalty streams related to 10 biosimilars. We're extremely excited and proud to have been selected as partner by Sandoz on their path to shaping the biosimilars market. In a nutshell, we're well on track with our strategy driving both scientific and operational excellence. Since the VC funding for biotech customers is relevant for approximately 30-40% of our revenue base in DNPD. Let me share some further background information about the market trend. Updated data on total venture capital funding environment shows no material change compared to the analysis we shared in August. The absolute funding level has not grown over the past two quarters. The share related to discovery and preclinical stage companies remains well below pre-pandemic levels, suggesting a continuing short-term investment focus on companies with clinical stage assets. We spoke about the temporary deprioritization of early discovery and development activities and funding. It needs to be overcome before we see a forceful recovery of the early drug discovery market. That said, we do see some encouraging developments. Negative change orders are normalizing and customer activities are increasing. In the first half of 2025 the balance between positive and negative change orders was impacted by higher than expected cancellation volume contributing to weaker sales performance. In DNPD, this effect was related to a small number of contracts which were cancelled by customers either for strategic or scientific reasons. In Q3 we're back to normal levels. The development of our change order balance is shown in the upper graph. In contrast to the comparably low funding activities for early stage biotech, the business activity level at Evotec has picked up. The number of proposals issued to our customers has grown 20% over the past two quarters and this is also in line with the growth in total value of proposals. Even though those early indicators are promising, we're not yet indicating a change of trend. We remain vigilant in monitoring market developments and continue to adapt to our customers' evolving needs in a more agile way. In parallel we are building a more targeted go to market approach and as mentioned last time, we're strengthening our commercial organization. I'd like to now hand over to Paul who will guide you through our financial results. Thank you Christian and a warm welcome from my side. Let me guide you through our year to date results in a little more detail. Our first nine months group revenues reached EUR 535 million, a 7% decline versus the same period in 2024 and is aligned with our expectations. Firstly, our DNPD revenues declined by 12% to EUR 391.9 million in a persisting soft market in early drug discovery and as Christian commented on in his introduction, also as mentioned last time, included in this result is the expected temporary decline in the BMS revenues. Our Just - Evotec Biologics business continues to grow strongly in the first nine months of the year and is on track for a very strong 2025. For the first nine months of 2025 revenues reached EUR 143.2 million which is up 11% versus the first half of 2024. As we mentioned last time, we continue to see a broadening of our customer base with non-Sandoz and non-DOD customers growing 105% in the first nine months versus last year. During the first nine months of 2025, our Sandoz business grew low single digits, although as we look forward, we expect meaningful full year growth following the completion of the recently announced transaction, which will include multi-year consideration for technology access, development revenues, and product royalties. Our R&D spending remains on the trajectory shared last time and is reduced by 33% versus prior year period, EUR 41.1 million in the first nine months of 2024 to EUR 27.7 million in the first nine months of 2025. As we direct our investments to those most relevant for our partners, adjusted group EBITDA reached negative EUR 16.9 million driven by the weaker than expected DMPD revenues and our fixed cost base. We are well on track with our cost out initiatives to deliver the EUR 60 million of in year structural cost reduction in 2025 that we communicated in our last call. We also remain focused on delivering the additional midterm cost and productivity actions that we discussed in our April update. Our Just - Evotec Biologics business remains ahead of expectations helped by positive operating leverage despite the planned JPOD buildout bridging to our full year outlook. We expect our fourth quarter profile to reflect the higher revenue contribution weighting that we have seen in prior years. In addition, our recent guidance update in July reflected lower full year DMPD revenues with an overall improved business mix including the effects of the events announced last night. Now continuing with cash flow, our year to date free cash flow has improved by 14% versus the same period last year. This is despite our third quarter operating cash flow having a tough comparable to last year when we received $125 million of BMS payments whilst the recently announced BMS neuro payments has only been received in the fourth quarter of this year. However, in line with our expectations, our investing cash flow continued to see sequential improvements as we drive more rigor in our CapEx investment processes whilst also completing the JPOD build out. Our net debt levels grew versus the second quarter of 2025 which also reflected the higher lease obligations following the adoption of a long term lease agreement in our Hamburg facility. Following the completion of our transaction with Sandoz planned in the fourth quarter of this year, we expect our liquidity to be in a significantly stronger position with the residual long term debt portfolio. With that I hand over to Cord. Thank you, Paul, and good morning and good afternoon to everybody on the call also from my side. As you know, at Evotec we strive for technology and science leadership on our mission to pioneer drug discovery and development. Our ambition is to accelerate the journey from concept to cure in partnership with our customers. Today we are pleased to talk about considerable achievements we have made along this strategy in both segments. Let me start with a look at the DNPD segment first. We are seeing great scientific progress with our strategic partnerships. Based on these achievements, we continue to feed and expand our strategic partnerships and are confident that our co-owned and asset pipeline will show substantial progress not only in 2025 but also during the next six to nine months. What is our approach? Christian already mentioned that we offer end-to-end discovery services including development and also highly innovative drug discovery technology platforms. We strive to combine both offerings to create superior customer value. Our core service offering spans the entire value chain from target identification to IND. When we combine those individual services, we can seamlessly run integrated research projects using highly automated workflows. This train of services shown in blue on this chart is the backbone of our operations within our strategic partnerships. We are then adding proprietary AI-enabled technology platforms on top of this. These are shown here in pink. These platforms elevate our drug discovery platforms to the next level. Our AI-driven platforms are targeting in particular four goals. We create a much deeper understanding of disease biology and therefore patient stratification through our proprietary molecular patient database. We improve our target ID and validation efforts as well as HIT identification through superior in vitro disease models driven by our iPSC platform. We enhance and accelerate HIT to lead and lead OP processes in silico profiling and AI supported molecular design. We reduce the risk of failures due to industry leading toxin safety predictive tools. This means that AI for us is not a standalone feature. We have embedded AI deeply into our toolbox, enhancing the performance of each and every platform in the value chain. Based on this, we not only shorten timelines but we also improve outcomes. Let me briefly take you through the individual elements. Our proprietary molecular patient database consists not only of highest quality and comprehensive clinical data but also of deep multi-omics data based on corresponding patient samples. This database is invaluable when it comes to target ID and validation and is supported by AI machine learning algorithms. Our Envent platform is a highly comprehensive suite of AI machine learning supported molecular design tools predicting everything from solubility, ADME, tox parameters, affinities to targets, but most importantly it supports our and accelerates our molecular design cycles. Our AE safety platform is a suite of NAMs consisting of gold standard in vitro models which are combining with high content omics and or high content imaging data to predict the safety and tox profiles of drug candidates. We are doing this with extremely high accuracies and I will come to this in more detail later. Furthermore, we have an extremely versatile iPSC drug screening platform which in combination with omics and high content imaging data is able to profile disease relevance as well as efficacy and safety of drug candidates throughout the drug discovery process with higher granularity and therefore higher accuracy than standard in vitro models. All of these platforms are underpinned by our seamless high performance omics platforms which can generate in particular transcriptome, proteome and metabolome data at highest quality and with unmatched throughput. I will come to the details here later as well. Finally, we are able to bring all of these data together in our data analysis tool called PanHunter. This tool facilitates the handling and the analysis of high dimensional data sets and is in many areas AI machine learning support. On the next page I will show you selected examples of significant scientific achievements in 2025 and also talk about how they translate into commercial results with our strategic partners. Thereafter I will show you how those partnerships are associated with highly attractive long term financial upside. Let me take you through a few selected highlights. I have mentioned the importance of our Evotec molecular patient database as a foundation for a better understanding of disease processes and therefore also target ID and validation, and in 2025 we have significantly expanded the database through the addition of new cohorts, in particular in kidney diseases, obesity, but also immunological diseases. This database continues to support strategic partnerships while also generating multimillion dollar success based payments. As far as our iPSC drug discovery platform is concerned, we continue to upgrade our disease models into more complex organoid type in vitro models. We have done this particularly successfully in the kidney disease space. We continue to also make progress in our AI supported small molecule design platform Envent. Here we continue to build models that support specifically the design of certain compound classes as we believe that there are no one size fits all models that are suitable for every compound class. We mentioned previously that we continue to invest in new approach methodologies to predict safety and toxicology of drug candidates. Also here we continue to make very significant progress by continuously improving our existing models while also adding further models. For example, our drug induced liver injury tox prediction tool continues to improve as now we have reached a predictive accuracy of more than 90%. Similarly, we have developed a highly predictive cardio tox prediction tool which also has a predictive accuracy of about 90%. A further example is a new model in a teratogenicity prediction tool where we are currently approaching 80% of predictive accuracy. To our knowledge, these omics and image-based AI-supported safety tox prediction tools are absolutely industry leading when it comes to their predictive accuracies. Finally, I would like to briefly talk about scientific progress in our panomics platform. Our high-performance panomics platform continues to evolve. In 2025 we reached two landmark achievements with our high-throughput transcriptomics platform called ScreenSeq. We conducted a high-throughput compound screen, screening over 250,000 compounds using transcriptomics as the primary readout. To our knowledge this is an industry first and has never been done before. Similarly, we keep improving our proteomics platform. We have improved efficiency, automation, and throughput of our platform significantly and expect to profile over 100,000 compounds in 2026 using proteomics as the primary readout. To our knowledge, there is no other company generating as many proteomics compound profiles in the industry or processing as many samples using proteomics. It is great to see that we continue to make this much progress on our AI-supported proprietary platform. Just as important is, however, that these platforms continue to support the business financially. The combined order value directly tied to these AI-enabled platforms is currently north of EUR 200 million already. Beyond this it is important to keep in mind that these platforms are not only supporting the business but through research payments they enable us to build strategic partnerships which fuel our partnered asset pipeline with very substantial financial upside and this is shown in more detail on the next slide. Today Evotec has a pipeline of more than 100 projects. Over 60% of these projects are part of strategic partnership and therefore fully supported by these. All of the more advanced assets, in particular those in clinical and preclinical stages, are supported by partnerships and therefore represent pure financial upside for Evotec. Collectively this portfolio represents a non risk adjusted value of over EUR 16 billion just in milestones. In 2025 the pipeline progressed significantly which means that the total milestone potential of more than EUR 16 billion as well as significant royalties is becoming increasingly tangible. Accumulated returns up to 2028 could total on the order of EUR 500 million. In April we gave you a status update on our asset portfolio at that time. In total we had 12 projects of our 100 projects were beyond the discovery stages. Six of these were in preclinical stages and six in clinical phase I. In 2025, two assets have progressed from phase I to phase II of clinical development. Furthermore, we expect that one asset will move from the preclinical into the clinical and moreover we anticipate further progress over the course of the next six to nine months with two further molecules expected to move to clinical phase II. This means that there is a high likelihood that our asset pipeline will have in total four molecules in clinical phase II, each of them with a different partner in different indication areas. Overall, we are clearly pleased with a lot of progress on multiple fronts. First of all, we have very significant scientific progress on AI-supported platforms. We have been able to show very significant progress in our clinical and preclinical portfolio of assays with two new assets in phase two and additional assets expected to come to the clinic soon. Finally, our discovery stage pipeline also continues to expand and is expected to continue to fuel our preclinical stage portfolio going forward. A lot more exciting news is to come here within the next six to nine months. This is where I hand over and back to Christian. Thank you Cord. Let us now switch gears from monetizing technology leadership in DNPD over to doing the same for Just - Evotec Biologics. As you will have noted, last night we announced the successful signing of the sale of the Just - Evotec Biologics Toulouse site to Sandoz. Under this transaction, Sandoz will acquire Just - Evotec Biologics Toulouse EU plus a technology license to our Continuous Manufacturing Platform. The agreement includes additional license fees and development revenues. This marks a pivotal milestone in the journey of Just - Evotec Biologics and underscores the successful execution of our strategy. We aim to close the transaction together in 2025 subject to meeting customary closing conditions including foreign direct investment clearance by the French authorities. With the transaction, we are reconfiguring our successful partnership with Sandoz, which started back in 2023 with the intent to support the expansion of Sandoz Biosimilars pipeline and was extended in July last year. We are now converting a collaboration that was based on a long term manufacturing arrangement and a new partnership centered around technology transfer and enabling our partners. The rationale for the deal is clear and compelling and it follows the strategy we outlined for the whole company. Number one, we will focus on our core competencies. This is making business by leveraging our technology leadership. Our intent is not to run a fleet of manufacturing sites as a classic CDMO player. Number two. We're entering a new episode of growth. Our commercial approach will pivot towards an asset lighter, higher margin business model, one that leverages best. Our technology scales to partnerships, avoids the need for large upfront capacity investments and delivers superior returns. Number three, we remain fully equipped to serve all our customers through our center of excellence in Redmond and Seattle. Operationally, we have no limitations to support the growth plans of our partners. Number four, this deal is financially highly attractive for Evotec as it provides us with short, medium and long term economic benefits. On this page you see a summary of the financial parameters of the deal. We've agreed on an initial consideration of about $350 million for the site transfer and upfront technology license payments which will be effective short term. Over the midterm, Evotec has the potential to generate revenues from licenses and development services plus milestones of over $300 million. Those payments are related to enabling our partner to manufacture biosimilars in the time period thereafter and starting with commercial success. Evotec is eligible to royalty payments for up to 10 molecules. These three phases, starting with a handover, create sustained cash flows over an extended period. At the same time, we improve our revenue mix, reduce CapEx intensity, and unlock high margin IP and technology streams. As part of the deal, up to 10 molecules developed with the Evotec continuous manufacturing technology are eligible for royalties. As recently published by Sandoz, the Evotec-partnered molecules in development are targeting a fairly large share of the originator biologics market. For example, the six most advanced molecules address a combined net sales of approximately $92 billion. Another four molecules are currently not disclosed. Looking ahead to the future of Just - Evotec Biologics, beyond our great collaboration with Sandoz, our US operations will remain a center of excellence for biologics discovery, process development, and manufacturing. A hub of innovation fully aligned with our mission to discover, develop, and deliver the next generation of medicines faster, smarter, and more sustainably. Given the strong momentum of our US business, with over 50 ongoing customer projects, we've expanded DNPD in Redmond and are contemplating further expansion manufacturing selectively. Going forward, we will provide additional commercial routes for our customers to use our proprietary technology. With a transaction announced last night, we've validated the value of the technology and we demonstrated the IP licensing model for Continuous Manufacturing Platform is a very attractive path for our partners. We're now adding further optionality including licensing of our cell lines, the fusion media, and the Launchpad concept to enable alternative manufacturing platforms via our JPOD design. In very simple terms, our job is to drive the innovation forward and to enable our partners to successfully launch and manufacture biologics products. Just - Evotec Biologics has four main compelling modules to offer on this page in blue: J.HAL for molecule discovery, GMD, our machine learning enabled molecular development technology, JP3 for complex biologics process development, and the JPORT for continuous manufacturing. Until now we have deployed this technology as part of an overall plan to manufacture biologics. This would have required Evotec to continue to invest in the expansion of a manufacturing footprint. The transformation towards the next generation CDMO model allows us to now deploy the technology without having to make those investments. All components are already in place such as JCHO, J.Media, J.TRAIN, and JPOD here in pink. The performance of our proprietary cells and cell culture media customized for the perfusion-based continuous manufacturing process is industry leading. Today we are only using them for in-house development. For tomorrow we see the potential to leverage these assets along a product commercialization path. On the path to enable our customers there are multiple options to ramp up manufacturing capacity using our technology without us directly investing, such as integrating a J.TRAIN into a customer's facility or providing turnkey solutions at the customer's premises. Over to guidance and outlook. Our midterm outlook shared in April is based on the ambition to better leverage technology and science leadership, the foundation of our strategy. It is therefore encouraging to see that the endorsement of an important customer of Just - Evotec Biologics such as Sandoz translates into tangible results only a few months later. Furthermore, our asset portfolio in DNPD has substantially progressed. The visibility towards our midterm goals has improved substantially. You heard the detailed financial analysis from Paul earlier, hence I keep it short here on this page. Despite the headwinds in the early drug discovery market, we have full confidence and confirm our guidance for 2025 with a targeted revenue of EUR 760 million-EUR 800 million and an expected adjusted EBITDA in the range of EUR 30 million-EUR 50 million. We also see Evotec on track to reach its midterm outlook at 8%-12% top line growth at EBITDA margins greater than 20%. With the actions in place, we gain visibility and increased confidence in delivering our EBITDA margin. Let me conclude by making reference to what we discussed on 17th of April this year with you. Only half a year later, we see three out of four levers of our midterm value creation unfolding their impacts. While it is too early to call the challenges in the DNPD market mastered, we see green shoots and continue to prepare our organization to be more competitive in this environment. Our cost out program is ahead of plan. We fast tracked the execution of our new strategy at Just - Evotec Biologics and the asset pipeline is progressing well for now. I would like to say thank you. We're now happy to answer your questions back to Lorenzo. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Charles Weston from RBC. Please go ahead, sir. Hello. Thank you for taking the questions. They're kind of sequential in nature, so I'll just ask them one at a time, please. Firstly, just factually, how much were Sandoz revenues in the first nine months and what would the division have looked like without the Sandoz revenues and the associated costs in Toulouse? Are you going to? Okay, so you want me to answer right away, right? Yes, please. That's okay. Hand this over to Paul. Yeah. Hey Charles. Good afternoon. I would answer your question as none. Sandoz revenue in aggregate year to date was north of 50% of the overall year to date. Also your question was around, I think, earnings contribution within that. The way to think about that is within the just profile that you see on a year to date basis, that includes a Toulouse build out cost of around EUR 20 million. It gives you a little bit. Of what our kind of normalized view. Of share and profitability looks like within the business. Okay, thank you. Thank you. And then associated with that, therefore how much of a EUR 30-50 million EBITDA guide for this year is the expected upfront recognition from the Sandoz deal? Yeah, just to give a little bit more color on the full year bridge. First of all on the DNPD segment, just to reiterate what we said last time, we see similar trajectory on full year revenues for DNPD. We do see some potential mix improvements from milestones as we get into the fourth quarter. On the Just - Evotec Biologics side of the business, again a couple of things. Continued outperformance and operating leverage as we go into the end of the year. Some impact of lower cost to Toulouse depending upon the completion timing once approvals are met. Indeed, there's a license recognition element from Sandoz. Sorry, I missed that last bit that you said around just after operating leverage. After, lower cost base in Toulouse, depending upon completion timing. Yes, there is a license recognition from Sandoz, the split of which is included or the value of which is included within the initial consideration that is shown on the presentation. Charles, at this stage we are not actually splitting out the license component within that initial $350 million of upfront payment. Okay. Thank you. That just leads me on to the last one please, for now, which is around the third. From 2025 to 2028, you've given us those revenue. That revenue CAGR guidance sort of implies EUR 140 million-EUR 180 million EBITDA in 2028 of a number that, excluding the Sandoz deal, is there about zero this year. Can you just help us understand what the trajectory is of that in terms of what we might expect as the sort of year-on-year progression over the next few years and how lumpy it might be depending on those milestones that you've talked about? Yeah, Charles, let me have a go. On the midterm outlook, you said we announced 8-12% revenue CAGRing with EBITDA margins by 2028 following the transaction. Also, the events that occurred so far this year, the DNPD business, I would say the revenue CAGR is on the lower end of that revenue range. However, we do see stronger potential on the EBITDA margin rate versus our initial planning assumptions as it pertains to milestones. Obviously, as you know, those are quite lumpy in both sides of the business, whether it is on DNPD or the Just - Evotec Biologics business. When you think about the transaction with Sandoz that we disclosed, where there is consideration between 2026 and 2028, what you should think about is around two-thirds of that is product development type activity and about one third is licenses and milestones which are subject to certain meeting criteria. It gives you a little flavor of what that may look like over that period of time over the next three years. Okay, thank you. Thanks very much for your help. Thanks, Charles. The next question comes from the line of Brendan Smith from TD. Please go ahead. Great. Thanks for taking the questions, guys. Actually, I really appreciate all the color on the AI capabilities internally. I actually wanted to ask just a bit more about this and really I guess to what extent the NAMs capabilities actually come up in your conversations with partners and customers thus far this year. If you've seen any material shift in that kind of tone? I mean, we get a lot of questions about whether pharma is kind of increasing investments in AI internally on their side, is impacting their engagement with external partners offering those kinds of capabilities. Just wondering if you're seeing any demonstrative shift in where they're engaging on that side of things or if NAMs offerings are actually increasing that and how you might expect that to kind of help grow revenues over the next, let's say 12 to 18 months. Thanks. Thanks, Brendan. Hand this over to Cord. I am really pleased to see also these questions. We recognize that we have maybe talked a little bit less in the past about those topics, but rest assured there is quite some activity at the Evotec site. Cord, please. The NAMs are definitely getting more attention and also from the pharma side particularly. Nevertheless, it's still sort of a. Sort. Of muted growth in the area at this point in time, but we do see real signs of acceleration because people, a lot of projects are integrating these NAMs at an earlier stage. You can imagine if you sort of have a predictive tool for drug-induced liver injury, if you introduce this late in the process, you essentially have to profile a handful of compounds maybe. If you introduce it early in the process, you are continuously profiling potentially hundreds of compounds. Here, this is why we keep talking about industrialization of these platforms and making them high throughput feasible because this sort of opens up the funnel to really bringing this into the on the critical path of the drug discovery value chain and incorporating these kind of assays at an earlier stage. Basically right after hit finding, essentially you can start incorporating this. I think with this sort of seeing that people are getting more and more interested in incorporating these NAMs early, I would expect to see the revenues vastly accelerate on this front. If it is within the next six months, I would say that would be very ambitious. But within the next 12-24 months, certainly. Got it. Thank you, that's very helpful. As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from the line of Finn Scharzer from Deutsche Bank. Please go ahead. Hi and thanks for taking my questions. The first one I would like to ask them one by one, it's on your drug discovery and preclinical development segment and whether you are able to give any sort of glimpse on what you expect into 2026. Some of your US peers sort of gave an early indication, I think Consensus sits at around 5% growth for next year. Do you consider this a sensible starting point for the year? As of now, would you point us to take a more cautious stance? I understood you spoke of green shirts and so on, but not really of an inflection yet. This would be very helpful. Thanks Finn for the question. Obviously our visibility at this point in time is not all the way through 2026 and keep in mind collectively the industry since quite a bit was actually looking at when exactly the tipping point is happening. I am a bit cautious with making statements about when exactly the market is coming back. As I said earlier, when you look at the individual bits and pieces here, you have seen on one slide the change order pattern that was not favorable in the first and second quarter, the negative change orders, but it was also related to a few individual wins. Q3 looks much better. You have seen the number of prospects going out, right? Plus 20%. You can draw conclusions out of that, but I am not doing it at this point in time because these prospects need to convert into sales orders. So. At this point in time, given that we have probably visibility into the next couple of months, I would not make a statement around plus 5% for the market next year. Okay, that's helpful. If I can maybe follow up with two shorter ones. On the profitability and the discovery and preclinical development segment, I think it was surprisingly weak this quarter, but the revenues were sequentially actually about stable. Could you maybe help explain that? Say that again please. I'm not sure I. No, sorry, I was just saying that I think the revenue in the discovery segment was pretty much flat sequentially, but the profitability was much worse. Worse than probably expected. What was the explanation for that? Yeah, this is Paul again. When you look at the year to date profile of the DNPD business and then compared to third quarter you are correct that it appears to take a step down. We did actually in the first half have better mix and then also a license benefit in the first half that impacted positively. It did not repeat in the third quarter as I said in my comments. However, we do see further opportunities around milestones for the fourth quarter for DNPD and that volatility if you like on milestone recognition will continue in this segment. That explains the delta there. Okay, and then one last one on the Sandoz deal, I'm not sure if you sort of compare the revenues that investors and the sales side had expected from sort of your CDMO income stream that is now falling away. How does this compare to what you will get now in terms of licensing revenue and so on and so forth? The EUR 300 million package you describe, what I'm trying to understand is consensus sits at around EUR 420 million for the JPOD business in 2028. Does that then look completely off from your point of view or is this still sort of the right ballpark or are people totally misunderstanding this at the moment? I think a couple of points here. First of all, I try to explain that there is the Sandoz deal and that's a fantastic opportunity to partner with Sandoz and it will continue to generate revenues and profit for the company. There is another 50 customer projects that we are serving out of the U.S. Do not forget to keep that in consideration. What we said is we're basically pivoting to a different model, right? The way that we look at it is a much more capital effective way of doing business. Moving from a manufacturing view to a license model allows us to generate revenues in our view at a higher margin rate and much more capital efficient. That's the driver why we've concluded that this is a great deal for the company, and as we said also last time, from an NPV perspective for us, this is a positive contribution. Yeah, Flynn. There is some level of reduction on revenues, but as Christian rightly says, significant improvement in the gross margin driven by that higher quality revenue mix, whether that's tech licenses, royalties, consumable sales that we talked about as well, and that lower capital intensity. We are trading to higher quality mix of business. Okay, that's very helpful, thank you. The next question comes from the line of Michael Ryskin from Bank of America. Please go ahead. Hi, thank you for taking the question. This is Aaron on for Mic. You called out the soft early drug development market environment and VC biotech funding. Given the current market environment, can you. Talk a little bit about what you're. Hearing from customers and related to that, a little bit more about the implications for the overall pricing environment. I think there's still uncertainty in the market, especially in biotech. I've also mentioned that our DNPD business, 30%-40% of the revenues is related to biotech. There's quite some exposure here. That's number one. Number two, as we also mentioned throughout the course of the year, while conversations continue, there's more slicing happening than what we've seen in the past. More cautious spending, less larger projects, more smaller projects, and decision making is slower. That's a little bit the environment that I have. The picture I've painted already in Q1 and in Q2, and we see this continuing with maybe the difference that. As. I said, the number of prospects have come up quite a bit over the course of the last month and quarters, which shows that there is more activity and hopefully also more prospects for 2026 pricing, obviously as a function of also capacity in the market. It is clear that there has been overcapacity across the market in drug discovery, but it is also clear that most players are right now adjusting like we are doing it. I see this actually also starting to normalize when demand and capacity is coming more into balance. Again. Great, thank you. Just a quick follow up. I wanted to actually ask about the prospects. I'm wondering if you're seeing the prospects or green shoots within similar geographic regions. If there's any geography that's performing better than expected, worse than expected. If you could provide a little bit of color there. Thank you. That is actually the case, but depends a little bit on the sub segment. As you know, we're less penetrating the Asian market. We've seen a little bit less dynamic in the US market earlier this year and that has flipped more to the European market. Not very consistent and conclusive at this point in time, but there is variation. Great, thank you. The next question comes from the line of Charles Weston from RBC. Please go ahead. Charles. Mr. Weston, your line is open. Please go ahead. Ladies and gentlemen, we lost the line with the questioner, so there are no more questions at this time. I would now like to turn the conference back over to Volker Braun for any closing remarks. Thank you, Lorenzo, and thanks to all in the comments. Carl, for the engaged discussion. In case you feel not all of. Your questions were addressed. Please feel free to reach out to me anytime. We're looking forward to meeting many of you. You at the upcoming investor conferences in November and December. With that, we wish you a good rest of the day. Thank you and goodbye.