Evotec to Acquire Renovis, Seek NASDAQ Listing

Evotec AG and Renovis, Inc. today announced that they have entered into a definitive agreement under which Evotec will acquire Renovis, a biopharmaceutical company focused on the discovery and development of drugs for major medical needs in the areas of pain and inflammatory diseases, in a stock-for-stock transaction valued at approximately US$ 151.8 million. The merger is expected to create an emerging global pharmaceutical company with three clinical candidates, a strong late stage preclinical pipeline focusing on areas of neurological and inflammatory diseases, and pro-forma cash of approximately US$ 175 million (as of 31 August 2007, not including proceeds from the disposal of Evotec’s Chemical Development Business to Aptuit, Inc. for approximately US$ 64 million and prior to the payment of transaction cost). The merged company will be called Evotec.

“By combining Evotec’s drug discovery and development know-how with Renovis’ medicinal chemistry and target validation expertise, we expect to form a global biopharmaceutical company with world class discovery capabilities, a strong pipeline in CNS disorders and several significant research partnerships with leading pharmaceutical companies such as Boehringer Ingelheim, Pfizer and Roche,” said Jörn Aldag, President & Chief Executive Officer of Evotec AG. “Additionally, this merger will provide us with discovery talent in the US biotechnology industry and will clearly sharpen the focus of Evotec’s existing drug discovery and development activities.”

Aldag continued: “Over the past year, we executed our strategy and streamlined our business by spinning out non-core assets: We completed the sale of Evotec Technologies to PerkinElmer for cash (received up to now approximately US$ 29 million), transferred our library synthesis business into a joint venture with Indian RSIL and recently announced the saleof our Chemical Development Business to Aptuit for approximately US$ 64 million in cash. We are now very well funded to drive three clinical programs to their next inflection points, as well as three later stage preclinical projects into the clinic in 2008. Based upon the Phase II data obtained with our lead compound EVT 201, we look forward to sharing the results of a second Phase II study in elderly insomniacs in October.”

Corey Goodman, Ph.D., Chief Executive Officer of Renovis, said: "The merger of the two companies represents an important opportunity for Renovis and its stockholders. The proposed transaction will combine leading science and complementary development programs across the CNS spectrum, creating a broad and innovative clinical, advanced preclinical andresearch portfolio. Furthermore, we expect the merger to create a stronger, more diverse company with substantial financial resources to support its continued discovery and development efforts. We believe this transaction will maximise the value of both Renovis’ preclinical and research portfolio and our innovative and productive scientific capabilities."

Key highlights of the transaction include:

• Innovative preclinical pipeline of Renovis product candidates, which complement Evotec’s program, and which include candidates expected to enter Phase I clinical trials in 2008:
• VR1 antagonists – lead preclinical program in collaboration with Pfizer Inc. in which Evotec will be eligible to receive milestone payments of more than US$ 170 million and double-digit royalties on worldwide net sales of products successfully developed and commercialized.
• Worldwide rights to antagonists of selected purinergic receptors (P2X7 and P2X3) with potential in a broad spectrum of pain and inflammatory conditions.
• A team of renowned research experts and industry veterans with proven track records expected to join Evotec; the total pro-forma headcount as of 31 August 2007 is approximately 630.
• A US-based facility located in South San Francisco, California, which will be a ‘center of excellence’ for innovative discovery projects for inflammatory diseases, pain and other related diseases based on the VR1 and P2X2/3 and P2X7 target families and potentially other ion channel targets. In addition, this will be the home of Evotec’s systems-based regenerative medicine research in progress under several contracts with the NIH, the ETH Zurich and other renowned academic institutes.
• As of the end of August 2007 Renovis had approximately US$ 87 million of cash, cash equivalents and short-term investments on its balance sheet. In addition, to approximately US$ 88 million on Evotec’s balance sheet, the combined companies would have a proforma cash position of approximately US$ 175 million. This does not include the estimated US$ 64 million in cash proceeds related to Evotec’s recently sold Chemical Development Business and is prior to payment of any transaction related cost.
• NASDAQ listing to be applied for by Evotec.

By the end of 2008, the combined Company expects to have at least five compounds in clinical trials. Evotec’s pipeline will include the following products:

• EVT 201: a partial positive allosteric modulator (pPAM) of GABAA receptors for the treatment of insomnia. The compound has shown robust effects on sleep onset and sleep maintenance in a Phase II proof-of-concept study in primary insomnia patients. Further PhaseII results in elderly insomniacs are expected to be released in October 2007. Evotec intends to partner EVT 201 in 2008.
• EVT 101: one of the few orally active and selective antagonists of the NR2B subunit-containing NMDA receptors in clinical development. Its selectivity may offer clinical advantages over current Alzheimer therapies and the Company believes that there is significantpotential in a number of pain indications. EVT 101 was well tolerated in Phase I studies and is now undergoing a short-term Phase Ib dose finding efficacy study in cognition. A second short-term Phase IIa study in pain is expected to start in the second half 2007.
• EVT 302: an orally active, highly selective and reversible inhibitor of MAO-B in development for smoking cessation with a potential additive effect to nicotine-based therapies, and with the potential for once per week dosing and for a superior safety profile. Results from ongoing Phase I PET and safety and tolerability studies are to be reported at the end of 2007.
• VR1 antagonists: broadly applicable analgesics with potentially differentiated profile for a variety of chronic or acute pain indications as well as urinary incontinence and asthma, in partnership with Pfizer. Entry into human clinical trials is expected for the first half of 2008.
• P2X7 antagonists: potential novel treatments for rheumatoid arthritis, irritable bowel syndrome, and chronic obstructive pulmonary disease. Human clinical trials are expected to begin in 2008.
• P2X3 antagonists: potential first-in-class treatments for inflammatory/ neuropathic pain and urinary disorders. Human clinical trials are expected to begin in the first half of 2009.

Details of the Proposed Transaction

Under the terms of the agreement, Evotec would issue, and Renovis shareholders would receive, American Depository Shares (ADSs) representing 1.0542 Evotec ordinary shares in exchange for each outstanding share of Renovis common stock such that current Evotec stockholders would own approximately 68.8% of the combined company and Renovis stockholders would own up to 31.2%. This exchange ratio is based on the closing price of Evotec shares of EUR 3.25 on 17 September 2007 and implies a purchase price of US$ 4.75 per common share of Renovis, or an equity value of approximately US$ 151.8 million. Prior to closing, Evotecintends to have its ADSs approved for initial listing on the NASDAQ Global Market. The transaction is expected to close by the first quarter of 2008 and is subject to the approval of Renovis’ stockholders, approval of Evotec’s NASDAQ listing and antitrust regulatory clearance, as well as other customary closing conditions.

The merger agreement has been unanimously approved by the Boards of Directors of Evotec and Renovis. Following the closing of the transaction, Jörn Aldag, Chief Executive Officer & President of Evotec will become Chief Executive Officer & President of the combined Company. Dr Michael Kelly, currently SVP R&D of Renovis, will become a member of Evotec’s Executive Management Team and will be President of Evotec’s US site. The combined Company's Supervisory Board is expected to consist of six directors. At the close of the merger, Dr Corey Goodman, CEO & President of Renovis, and John Walker, Chairman of the Board of Renovis shall be appointed to the Evotec Supervisory Board.

Lehman Brothers Inc. served as financial advisor to Evotec. Cowen and Company, LLC served as financial advisor to Renovis.