In a strategic move to prioritize its core modalities, German biotech company Evotec has announced its departure from the gene therapy space. The decision, outlined in the company's first-quarter earnings release, aims to bring a greater focus on Evotec's primary areas of expertise.

As part of this repositioning, Evotec will be closing its site in Orth an der Donau, Austria, known as Evotec Gene Therapy. Currently employing around 40 individuals who offer comprehensive gene therapy development services, the company is actively working with stakeholders to minimize the impact on affected employees.

Evotec, which provides drug development services to major pharmaceutical companies and hundreds of biotech clients, had previously indicated the need for a strategic reset to optimize its operational and corporate structure. Mario Polywka, Interim CEO, emphasized the objective of protecting the company's strong balance sheet and refocusing on profitable growth in the coming years.

While Evotec's consolidating reporting structures were revealed in April, the exit from the gene therapy business represents a significant change for the company. Previously, the gene therapy segment provided a range of services to biopharma clients, including the design of viral AAV vectors, generating AAV material for research and non-clinical studies, target validation through in vitro and in vivo proof of concept studies, and conducting non-clinical gene therapy studies.

The decision to exit the gene therapy space was likely influenced by Evotec's challenging first quarter performance. The company cited a difficult market for transactional businesses as a contributing factor to a 23% drop in shared R&D revenues, totaling 155.2 million euros ($168.1 million) during this period.

As Evotec makes this strategic pivot, stakeholders will closely watch how the company's refocusing efforts unfold and its renewed emphasis on core modalities brings about profitable growth in the future.