As a consequence of executing on this strategy, the Company's clinical development expenses decreased significantly over the past two years and the majority of the Company's reported R&D expenses are spent on selected early discovery projects.

4. Acquisitions and partnerships opening new routes of growth and innovation

Evotec also increasingly invests in developing early assets in highly innovative areas of drug discovery such as regenerative medicine (e.g. beta cell regeneration) and technologies to better understand oncology or metabolic diseases to support further growth. To this end the Company has executed two strategic acquisition processes in 2010 to kick-start novel innovative approaches in drug discovery.

In July 2010, Evotec acquired DeveloGen, a biopharmaceutical company engaged in the discovery of novel therapeutic approaches for the treatment of metabolic and endocrine disorders. The transaction added expertise and early discovery assets in two key fields of high unmet medical needs, especially diabetes and metabolic disorders, and additionally opened the field of regenerative medicine - a key strategic step for Evotec in 2010.

The acquisition also augmented and complemented Evotec's high-end drug discovery platform and capability with DeveloGen's target discovery, validation and in vivo/in vitro pharmacology expertise and added core disease biology know-how in metabolic diseases. These skills further enhance Evotec's ability to deliver high quality, innovative solutions to its partners on a global scale.

In December 2010, Evotec entered into a license and collaboration agreement with MedImmune Ltd, a wholly owned subsidiary of AstraZeneca, in the field of diabetes with a particular focus on the regeneration of insulin producing beta cells. The license gives MedImmune exclusive access to a portfolio of research and development programmes and represents the first deal executed by Evotec on assets and capabilities acquired through its purchase of DeveloGen. After integration of Evotec Gottingen (formerly DeveloGen) the business is profitable and strongly growing.

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