Evotec, NetraMark Holdings, and Pfizer: How to leverage the hidden biotech boom for returns!

Evotec – Where does the Hamburg-based research service provider stand?

Evotec is in the midst of a powerful transformation. Under new CEO Christian Wojczewski, the Company is consistently focusing on more profitable business models. Although the revenue outlook for 2025 was recently lowered to EUR 760-800 million, mainly due to weaknesses in the traditional shared R&D business and a changed revenue mix, the EBITDA target of EUR 30-50 million remains unchanged. This is mainly due to cost savings exceeding expectations from the ongoing "Priority Reset" program. Management plans to move away from the capital-intensive core business toward more lucrative technology licenses, which should significantly increase margins in the medium term.

Strategic partnerships are the engine for future growth. The billion-dollar collaboration with Bristol Myers Squibb (BMS) in the field of "Molecular Glue Degraders" is a flagship project and has already generated a significant upfront payment. Further alliances with heavyweights such as Sandoz, Novo Nordisk, and Pfizer strengthen the pipeline, particularly in cell therapies. A key step is the planned sale of the Toulouse biologics site to Sandoz for around USD 300 million plus future cash flows. This deal reduces capital commitment and shifts the revenue mix sustainably toward higher margins and better returns on capital.

A rigorous restructuring is underway behind the scenes. The "Priority Reset" aims to improve annual EBITDA by EUR 40 million by focusing on profitable segments and reducing costs. This includes the sale of sites such as Halle/Westphalia and a planned reduction of approximately 400 employees. These strict measures are intended to increase financial agility. In the long term, Evotec will benefit from the growth of the pharmaceutical research market, driven by the increasing outsourcing of complex development work. The realignment under Wojczewski aims to make the Company more resilient and profitable for the future. The share, which is currently trading at EUR 6.782, could receive its biggest boost from a takeover bid.

NetraMark Holdings – AI against costly mistakes in the pharmaceutical industry

NetraMark has carved out a clear niche for itself. The Company monetizes the high error costs of the pharmaceutical industry in late-stage studies. Instead of focusing on expensive drug discovery like other AI players, it addresses the core problem of heterogeneous patient groups. Its proprietary "Attractor AI" technology, which forms the core of the NetraAI platform, searches raw data from ongoing or completed studies prior to randomization, which is crucial for regulatory purposes. Within a short period of time, it identifies statistically significant subgroups that distort study results, for example, through biomarkers or placebo reactions. The result is optimized inclusion criteria for homogeneous cohorts. With fixed costs of only around CAD 200,000 per month and a target gross margin of around 90%, the model is scalable.

At the end of July, NetraMark demonstrated commercial viability through two key partnerships. AlgoTherapeutix was the first. Here, NetraMark is using its AI on patient data from the ATX01 study. The goal is to identify "responder" personas and optimize future study designs against placebo effects. On July 30, the collaboration with Pentara was announced. Together, they are developing an AI tool for the early detection of data anomalies in trial centers. It analyzes variability and associations prior to randomization and generates risk scores, thus integrating an early warning system for data integrity. Both collaborations validate the technology in practice and open up new customer groups, either directly with pharmaceutical manufacturers or via service providers such as Pentara.

NetraMark has already implemented these distribution channels, with a contract with a large pharmaceutical company and embedded solutions via CROs (Contract Research Organizations) such as Worldwide Clinical Trials. The market for study optimization is projected to grow from around USD 62 billion to as much as USD 120 billion by 2034. The recent partnerships with Pentara and AlgoTherapeutix suggest that NetraMark's technology is gaining broader acceptance beyond its initial niche. Management aims to break even with revenues of just over CAD 2 million by 2025. Whether this goal will be achieved now depends on the scalability of the sales pipeline. The biggest hurdle remains the typically slow decision-making cycles in the pharmaceutical industry. The stock gained significantly at the beginning of the year and is currently consolidating, trading at CAD 1.39.

Pfizer – Vaccine update and oncology boost in focus

European approval for the new COVID-19 vaccine from Pfizer/BioNTech is drawing closer. The LP.8.1 version stands out, as it shows an improved immune response against dominant variants such as XFG and NB.1.8.1 compared to current vaccines. Once the EU Commission gives the green light, EU countries can expect deliveries, just in time for the expected demand in the fall. This is relevant because over a billion people have already received Comirnaty®-based vaccinations. This adapted booster highlights the ongoing adaptation to the virus.

At the same time, Pfizer is pumping up its oncology portfolio. A global licensing agreement with 3SBio secures Pfizer's rights to SSGJ-707, a promising bispecific antibody against PD-1 and VEGF. This candidate complements Pfizer's growing cancer immunotherapy division, particularly the ADC (Antibody-Drug Conjugate) platform. Initial clinical data in advanced lung cancer were encouraging. In addition, the EMBARK study of Xtandi® in prostate cancer patients at high risk of recurrence delivered positive survival data. Both underscore Pfizer's focus on transformative cancer medicines.

For investors, the picture remains mixed. On the one hand, an aggressive cost-cutting program is driving margins, while oncology and vaccines are supporting the core business outside of COVID. On the other hand, the Sword of Damocles in the form of patent expiries through 2028 weighs heavily on the valuation. The outlook depends heavily on whether the promising pipeline, especially in oncology, delivers the expected blockbusters and closes the revenue gap. The upcoming quarters, with Q2 results due on August 5, will show whether the strategic decisions are bearing fruit. A share currently costs USD 23.51.

The healthcare industry is proving remarkably resilient despite market volatility, with individual stocks impressing with innovation or strategic change. Evotec is pushing ahead with a painful but necessary transformation under new CEO Wojczewski to achieve more profitable margins through focus, partnerships, and the sale of Toulouse to Sandoz. NetraMark Holdings is successfully addressing the costly problem of heterogeneous patient groups in studies with its "Attractor AI" and is validating its scalable model through important partnerships such as those with AlgoTherapeutix and Pentara. In addition to its adapted COVID-19 booster, Pfizer is relying on its aggressively expanded oncology portfolio and cost reductions, but must close the looming revenue gap caused by patent expiries.