Almirall, S.A.

Thank you for joining us for today's quarterly earnings update and review of Almiral's first quarter financial results of 2025. As always, we are sharing the slides we are using today in the investor section of our website at almiral.com. Please move to slide number two. Let me remind you that the information presented in this call contains forward-looking statements, which involve known and unknown risks. uncertainties, and other factors that may cause actual results to materially differ from what we are sharing today. Please move to slide number three. Presenting today are Carlos Gallardo, Chairman and Chief Executive Officer, Mike McKellan, Chief Financial Officer, and Carl Sigabar, Chief Scientific Officer. Carlos will start with the business highlights covering the first quarter of 2025. followed by an update especially on biologics as the key growth drivers on our medical dermatology portfolio. Carl will provide you with an R&D status update regarding our pipeline. And Mike will then talk you through the financials before Carlos concludes the presentation. And we open for questions. I will hand over to Carlos Gallardo, our chairman and CEO. Please move to slide number five.

Thank you, Pablo. We are delighted to share with you that we have started the year with continued strong business performance that is very much aligned with the long-term trajectory of sustained growth we have outlined for Foral Mirai recently. Therefore, we are pleased to confirm our full year guidance for 2025, our mid-term outlook and pictures projections. This represents another quarter in the right direction in our ambition to transform the life of pay Euclid delivered a strong peak sales during the first quarter of 2025, benefiting from the dynamic German market, but also from initial contributions from launches in additional countries. Illumetri continues to show year-on-year growth, and we confirm our recently updated peak sales projections. Additionally, we thought Ancai City continued to support our sales in Europe. We remain very active in the medical community, and this first quarter has not been an exception. As an illustration, we've been at the 2025 Annual American Academy of Dermatology meeting, where we showcased our success in AK treatment with Clive City and shared exciting Phase I data on our anti-IL-1 wrap. We were also present at the 16th Skin Academy in Barcelona. This is our flagship medical educational event. where we had over 800 delegates from different countries. We participated on the 11th World Congress of Melanoma and the 21st European Organization of Thermal Oncology Congress in Athens, hosting over 1200 healthcare professionals. This is very important for us, this interaction with medical professionals, and we constantly seek external opportunities and the early and mid stages of clinical development to enhance our portfolio and impact the dermatology field. Please move to slide seven for an update on our biologics portfolio. Illumetri and the IL-23 class have continued to secure a strong position in the psoriasis market. Illumetri's market share remains solid, underpinned by the recent introduction of the 200 milligram presentation. This new treatment option has been very well received and is contributing to our robust performance. Net sales for Illumetri are up 13% year-on-year, reaching 55 million in the first quarter of 2025. I would like to reiterate our recently upgraded pixel projection of over 300 million and underscore our confidence on Illumetri's continued growth and its potential to make a significant impact in the psoriasis treatment landscape. Please move to the next slide on Eblis for Eblis highlights. Eblis have shown strong performance after being on the market for just over a year. Starting with the December 2020 launch in Germany, cumulative sales since then have reached over 54 million. We consider this the best launch in atopic dermatitis in recent years. Our strategic focus has allowed us for a strong initial uptick in Germany, positioning us well to launch in other European markets. Within a year of launch, we have reached the second highest dynamic new patient share in Germany. Also, reimbursement pricing in Germany and in other countries is either in line with our expectations or even slightly better, and brand awareness is strong, exceeding the average within one year of launching in various markets. Sales in the first quarter increased by 52%, quarter on quarter, reaching 19.4 million euros. Driven largely by Germany, but as I said before, also we're seeing the contribution of recently launched regions beyond Germany. Our good partnership with Lilly is leading to fruitful exchanges and key learnings. Let's move to the next slide for more details on the launch timeline. has already been launched now in all key countries in Europe, which combined represent more than 90% of the total sales potential in the region. We are progressing with launches in new European markets and have seen significant advancements since the German launch back in December 2023. As of today, EBIT is available for commercial reimbursement in 13 countries in Europe, including France as of last month, April 2025. We are very excited about this new launch as France represents a very important market for us. It is important to re-emphasize that we have been able to secure solid price levels in the launch markets. This is a prime example of how the desire for alternative treatments in atopic dermatitis is significant in the different national healthcare systems. Next, please move to slide 11 where I invite Carl to give us an update on our positive R&D and pipeline progress.

Thank you, Carlos, and good morning, everyone on the call. This slide shows you the progress of our pipeline. Saracycline's regulatory review in China is ongoing. We expect approval in the second half of 2025. For glycerin expansion to large field in Europe, we are finishing a clinical study aiming to launch in 2026. Together with our partners, we continue to work on expanding the labels for our key products, Illumetri and Epclif. Our partners and pharma is running two phase three studies to assess efficacy and safety of Tiltrakisumab in patients suffering from psoriatic arthritis. First results are being expected in the second half of 2025. Together with our partner, Eli Lilly, we are running a joint clinical development program to make EPCLIS available to additional patient population. I will give more details on the next slide. We have created an exciting early clinical pipeline, addressing novel mechanisms and best-in-class compounds in high medical need diseases. In the next year, we plan to initiate four proof-of-concept Phase II clinical studies across a spectrum of different dermatological diseases. Let me highlight a few assets. For our anti-IL-1 rep monoclonal antibody, we have completed Phase I single and ascending doses in healthy volunteers and presented the results at the recent AAD meeting. Overall, our anti-ALVA and RAP monoclonal antibody demonstrated a favorable safety and tolerability profile in healthy volunteers, along with a low immunogenicity risk supporting its further development for the treatment of immune-mediated inflammatory skin disorders. We plan to start a phase two study later this year in Hidradenitis suppurativa. Let me also highlight that we are advancing ZKN013 in phase one as potential new treatment for severe dermatological indications, such as dystrophic epidermolysis bullosa and junctional epidermolysis bullosa. ZKN013 is an oral read-through inducer designed to overcome nonsense mutation that cause a premature stop codon. In summary, we are progressing with both our early and late stage pipeline. Now, let's move to slide 12. This slide shows the comprehensive joint clinical development program for leprechaun with our partner, Eli Lilly. This joint program will allow us to make leprechaun available to additional patient populations or in different settings. Let me highlight some of the studies. This year, in all European markets, we will complement our excellent clinical data package with real-world evidence studies. One example is the so-called AD Trust Study I highlighted in the last call. To make leprechaun available to all patients with atopic dermatitis, Our partner Eli Lilly is running a phase three study exploring the safety and efficacy of leprechaun in patients six months to under 18 years. Primary completion is expected in 2026. Furthermore, our partner Eli Lilly has started the ADTouch study. Exploring efficacy and safety of leprechaun in adults and adolescents with moderate to severe atopic hand and foot dermatitis. Atopic hand and foot dermatitis is a frequent, chronic, and difficult to treat condition. It can substantially impact the patient's quality of life. There is tremendous interest from academic investigators in further exploring leprechaun map in different indications or settings. For example, Professor Johann Hutchinson from University of Michigan, a leading expert in applying genomics technology to advance the molecular understanding of inflammatory skin diseases, will be the lead investigator for the so-called AD5 study. AD-FIND is a mechanistic study aimed at understanding at the cellular and molecular level the changes in the skin of patients suffering from moderate to severe atopic dermatitis when treated with leprechaun. Finally, in addition to the two studies in perennial allergic rhinitis and chronic rhinocytosis with nasal polyps, our partner Eli Lilly is running, we continue to explore new indications for which R13 is hypothesized to be a key pathogenic drive. With that, I will hand over to Mike for the financial review.

Thank you, Carl, for the update on our R&D progress in pipeline activities. As Carlos mentioned earlier, we're excited to start off the year on a positive note. We displayed solid performance in the first quarter of 2025, with 15% net sales increase year-on-year. Please bear in mind that this includes the recently announced out-licensing of Algedal and Secchison in Spain. Excluding the impact of this transaction, net sales growth for Q1 would land around 10%, aligned with our 2025 guidance. The full-year net impact should be approximately $15 million at the avatar level. We're very pleased with the growth of our European dermatology portfolio, which continues to boost our overall net sales. This is a key pillar in our journey towards leadership in medical dermatology. Our gross margin came in at 66.9%, aided by the effects of the out-licensing transaction in Q1, but up slightly from 2024, excluding this impact. We achieved a total EBITDA of $70.9 million in Q1 2025, up 35% versus Q1-24. This was driven by robust net sales growth and the previously mentioned outlicensing. Excluding this outlicensing, our EBITDA margin in the quarter would have landed in the low 20%. SG&A in Q1-2025 is up 9.6% to $122.8 million. We've driven investments in recent and upcoming EBLIS launches to support the brand's growth trajectory as Q1 2024 did not have the full staffing yet in the recent launch countries. R&D investment is up 34% year-on-year, representing 12.5% of net sales, in line with our annual target to advance our pipeline and future growth strategy. The high growth rate versus prior year is due to phasing impacts, as Q1 2024 was lighter before a second half ramp-up last year. We ended the first quarter with a net debt to EBITDA ratio of 0.1 times, positioning us very well for potential licensing or bolt-on M&A opportunities. Although this gives us confidence to reiterate our full year 2025 guidance, and we remain on track with the midterm outlook and peak sales updates announced earlier in the year. Let's move on to the details of our sales breakdown in slide 15. The European dermatology business displayed a very strong performance, growing 23.4% year-on-year, which I'll cover in the next slide. Our general medicine and OTC sales growth in Europe was driven mainly by the recent out-licensing activity, with the rest of the business flat due to a late allergy season and the ongoing decline of epacete tesevel, which was offset by strong out-of-match performance. The full year-out licensing and royalty income for the company will be relatively similar to 2024 and prior years, with roughly 15 million in this total bucket in 2024 and 20 to 25 million in this total bucket for 2025, including the Q1 activity. This is part of our normal portfolio value maximization strategy. Our U.S. business declined slightly, and I'll share more details with that on the next slide. The performance of our general medicine unit in the rest of the world is down, primarily due to lower evistel and immunorex sales. Let's take a closer look at our dermatology business on the next slide. As mentioned by Carlos, our European dermatology segment continues to thrive, with Illumetri and Evglos as the primary drivers. Other growth drivers, such as Glycerin and Winzor, are making progress with their launches in key European markets. Eblis sales reached $19.4 million in the first quarter, becoming our second-ranked dermatology product after just over one year on the market. This result is in line with our expectations and enhances our confidence in its strong growth trajectory. The U.S. business is generally stable, with Seysora sales in line with the prior year. The positive impact of the recent large-field launch for Plyceria in August is starting to take effect, and the overall impact has grown since launch. The U.S. legacy business remains under pressure from ongoing generic pressure related to cordon tape, although axon sales have picked up year on year. Dermatology sales in real quick were off by a slight increase in juvie and cyclopoly income. Now let's move on to the complete financial statements on slide 16. Let's review the rest of the bill, starting with some elements Carlos mentioned earlier. Gross margin for Q1 2025 increased to 66.9%. As we mentioned earlier, this is largely due from the one-time impact of the out-licensing deal with a slight increase in the underlying business due to better product mix. We anticipate some gross margin pressure for the full year versus 2024 due to sales mix and higher royalty tiers as elementary sales increase and we maintain our full year expectations as mentioned in our February call which included this outlicing transaction. Our R&D investments have risen to 12.5% in net sales, up from 10.7% in Q1 of 2024, and we expect this 12%-ish level to remain steady during the year to support our innovation strategy. SG&A investments grew by almost 10% compared to Q1 2024. We expect this trend to continue as we focus on launching EPLIS in new markets, and support existing ones. But the growth will decelerate somewhat in the second half once we reach periods with comparable structures. Financial expenses benefit from a $3.9 million improvement year-on-year, primarily due to the positive equity swap valuation driven by recent share price gains. Bear in mind that our effective tax rate is influenced by the inability to offset U.S. tax losses against our profitable European business. We anticipate this will continue in 2025, And we should land in the mid 40% range of effective tax rate before declining in 2026 and beyond into the mid 20s, as we mentioned in the full year call. Please move to the next slide and take a look at the balance sheet. The main highlight on the balance sheet is the impact of the investments in intangible assets during the quarter. In addition to R&D capitalization related to EPLIS, key investments also include a milestone upon a successful phase one of our anti-IO1 RAP program, which we ins-licensed from ECNOS in 2021. The total impact has been outweighed by higher depreciation. Our net debt ratio remains solid at 0.1 times, allowing for more flexibility in organic growth opportunities. Let's take a look at the cash flow statement next. We generated an operating cash flow of $26.4 million in Q1 2025. Despite significant challenges in working capital compared to Q1-24, due to the EBLIS launch in new countries and higher receivables from the higher sales, we were able to partially offset this with the increase in profit before tax, which was in our favor. Other adjustments mainly relate to financial income, including the equity swap. Cash outflows associated with investments are much lower in Q125 than Q124. This is largely due to substantial payments made last year, including a $45 million milestone for EBLIS and its first EU sales, and $20 million for Illumetri. We anticipate an additional $45 million Illumetri sales milestone to be made in Q1 of 2025. The remaining Q1 investments were minor payments on existing agreements. With that, I hand back to Carlos for the closing remarks.

Thank you, Mike. Thank you, Carlos. As we think of 2025, we are pleased to see accelerating growth In terms of R&D, we anticipate more exciting pipeline updates in the next 12 to 24 months. Over the past decade, we have built a successful platform in medical dermatology, and now several factors set us apart in the field, positioning us well in growing markets with numerous and met needs. First, we possess a strong scientific and innovation capability. Second, we have a robust pipeline with disruptive potential, featuring several first-in-class and best-in-class molecules. Finally, our close relationship with dermatologists and patient groups across Europe gives us a competitive edge. Our capital allocation focuses on four principles. Investing in current and future product launches in dermatology to drive acceleration in mid-term revenue growth. Strengthening our pipeline via proprietary research and licensing assets. maintaining a stable dividend for shareholders and exploring inorganic growth whilst maintaining a prudent financial policy and solid liquidity. We are very excited to lead Almeria into the next phase of our journey towards becoming leaders in medical dermatology and look forward to continued growth in the coming years. With this, we conclude the presentation and I hand it back to Pablo for the Q&A.

Thank you very much, Carlos. Sandra, back to you for the Q&A, please.

Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To answer your question, please press star 1 1 again. We will now take the first question. From the line of Sean Hammer from Jefferies, please go ahead.

Hi, thank you so much. Just two from me, please. Could you give us an insight into perhaps any physician and patient feedback on positioning, especially versus the PIXN? And then in terms of streamlining the business further and increasing your R&D engine, should we expect more of these divestments, particularly of your mature DERM business and perhaps your OTC business? Thank you so much.

Please, could you repeat the first question? I can repeat it.

Yeah, of course. In terms of physician and patient feedback on Ebbglis and sort of positioning versus Depixen. Thank you.

Yes, I can start with the first question. So the feedback overall is extremely positive. value that they can use epclis in all different kind of patients also specifically in difficult to treat patients and they see a very fast onset of syndromes i think with the entire clinical experience from the market We believe that EPCLS has a profile that allows us to push in fissioning as a first-line treatment for atopic dermatitis.

Yeah, and I can cover the question about divestments. As I mentioned in my remarks, we don't expect significant divestments or outlicensing income. Last year, we had about $15 million in total between small activities and royalties. This year, we expect around $20 to $25 million. This is just part of some minor non-Derma value maximization we do. In terms of the Derma products, we do do some out-of-licensing of the products that we haven't launched, like Finjuve and Terabenefine. But we don't expect to do any major transactions in terms of reshaping. Nothing significant is on the plans in the near term.

Thank you. We will now take the next question from the line of Guilherme Sampaio from CaixaBank. Please go ahead.

Hello. Thank you for taking my questions. So, two again, if I may. On AWIS, If you could quantify a bit the share of Germany's sales in Q1 and note any stocking effects in other countries that we should be aware of when extrapolating for the full year. I remember that at the time of Q4 results, consensus was about 95 million sales for Airbus for this year. Is this still a level that you're comfortable with? And the second question, in terms of ,, should we think that in terms of phasing of growth going forward, these low double digits percentage growth is about the level that we should expect? Thank you.

Thank you for the question. So in terms of ,, we see already other countries, as I mentioned, and other countries, we remain very comfortable with their consensus for the full year. And as we're getting in, we keep getting exceptional feedback from physicians from the different countries where we have loans. On Illumetri, given that we have Paolo here, maybe, Paolo, do you want to comment on the second question?

Yes, sure. Hi, everyone. This is Paolo Cionini, the chief commercial officer. uh so uh the market in in psoriasis of course is a mature market and uh il23 class is the class basically leading the growth in uh in this market uh our positions i think is quite strong with the double digit market share we are happy with the the positions we are taking and with the trend of the product so we expect the market of course being more mature in the future sending lumetri staying in the market and keeping the competitive positions we have I would like also to mention that we have recently launched the 200 milligrams, which is something extremely important because we are the only IL-23 with two dosages to give an opportunity to both patients and dermatologists to be flexible with their patients and manage at the right levels eventually flares in periods where the variability of the disease can change. So I think that thanks to these 200 milligrams, we can also strengthen our positions into the market.

Okay, thank you.

Thank you. We will now take the next question. From the line of Alvaro Lente from Alantra Equities, please go ahead.

hi thanks for taking my questions the first one is if you could provide some detail on the pricing in france since since you launched how does it compare to germany and other european countries second question in clay siri if you can provide some detail on the trends there because we are not seeing much of a pickup in revenue contribution despite the the level extension and lastly i didn't get my comments on milestones, on milestone payments for the year. I got some 45 million paid for Illumetri in Q1, but that doesn't seem to show up in the cash flow statement, or maybe I'm looking at it wrong. Thank you.

Thank you, Álvaro, for the questions. So, we are extremely pleased with our new launch in France. This is a fundamental, very important market. for us or biologics, we have been able to secure an attractive price and we've been able to secure, to launch it even ahead of what we had in our schedule. So that's great news. And again, that's testimony as we mentioned in my earlier remarks, the great work that the team is doing on the ground for us in France, but also the eagerness of the health systems. And France has not been an exception to adopt EGLIS, as there's tremendous amenities still remaining in the treatment of atopic dermatitis. We don't comment specifically on its price country by country, but what I can say is that it's a price that was in our plan and we have achieved it, so we're pleased about it. MyCity largely continues to contribute in the U.S. It's not eating into the share of the whole So far, the progression is good. And the question was on milestones, right? So, Mike, do you want to comment on that?

Yes, yes. I'll take the milestone question. Sorry if it wasn't clear. When I talked about the $45 million for elementary, that'll be a Q2 payment. We had quite a few in Q1 last year. Not much in Q1 this year. We'll have a Q2. The overall full-year milestones in investments, I would say, would probably land between $70 and $80 million this year. very similar to last year's full-year cash flow, just a little bit of a different quarterly pattern. Thank you. That's very helpful.

Thank you. As a reminder, if you wish to ask a question, please press star 1 and 1. We will now take the next question from the line of Jaime Escribano from Banco Santander. Please go ahead.

Hi, good morning. So a couple of questions from my side or maybe three. First one on gross margin. So gross margin excluding the sale I get Something like more than 65%. So this is a little bit higher than the usual. I think your guidance was more closer to 64% or so. So better than expected just to understand what is behind that and what should we expect for the rest of the year. Second question regarding your guidance for the year. If we do a simple run rate, EBDA taking Q1 without the asset sale, plus the asset sale, you get to the high part or even more. than the 240. So just wanted to know your thoughts. Is it that you are going to spend more OPEX in the following quarters, or do you see upside risk to the mid-range of your guidance? And the final question regarding tariffs, if you can tell us what would be your exposure in case the US put, just as an example from newspapers, a 25% tariff on imports? And also, what is your exposure on retaliation if Europe puts tariffs to the U.S., products like or that you are imported from there? What is your exposure and what are the mitigating factors you have? Thank you very much.

Thank you for your questions. I will leave the question for Mike. Guidance for the year, I think very pleased with the start of 2025, quarter one, great results. We're in line with the guidance that we gave you a few months ago, so I think it's worth it today to make additional comments on that. Again, very comfortable and moving in definitely the right direction with the guidance, very comfortable here. Again, we're in a very good place on that regard. Our U.S. business, as you know, is around 5%. We see really marginal impact, if any, regardless of what is the tariff that is finally imposed, if any, again, and if there's any regulatory tariffs. Again, there will be no impact or very marginal impact from our side either way. So also, we're in a good place here.

Yeah, and I'll take the gross margin question. Thanks, Jaime. Yes, we had a good gross margin in Q1, even if you take out the licensing transaction. We still expect the full year to be slightly down from last year. Last year's gross margin was 64.7. I would say we probably... have a little bit like 20 basis points to 50 basis points of pressure. So still above 64, but maybe a little bit lower than last year. It really depends on the product mix. This Q1, we actually saw slow allergy season. We saw slow cough and cold season. The weather's been impacting in Europe a little bit, Q1. So having a slow cough and cold season actually helped our gross margin a little bit with those margin products. So I don't think it changes drastically our prediction for the full year.

Okay, thank you very much.

Thank you. Once again, as a reminder, if you wish to ask a question, please press star 1 and 1 on your telephone. That's star 1 and 1 if you wish to ask a question. We will now take the next question. from the line of Jaime Escribano from Banco Santander. Please go ahead.

Hi, one final question from my side. On the pipeline, maybe for Carl, the Hidradenitis suppurativa looks like a very nice opportunity. Can you dig a little bit deeper on the on the potential um of this new compound uh bearing in mind i don't know comparison with other peers and size of the market so any any color that you can provide on on that opportunity would be great thanks jamie very happy to provide a little bit of color on that

is a very high medical need indication, so really with a lot of impact on patient's quality of life. There are already certain treatments available, but the benefit so far is rather limited, and there is still a very high medical need in these indications, which is from the prevalence about one-fourth of AD, so it could become a very significant indication. We are very excited about our anti-IL-1 rep monoclonal antibody, where we just have completed phase one and plan to start a phase two later this year, because it combines mode of action that have been shown individually already activity in this indication. On the one side, the anti-IL-1 beta antibodies have shown some activity, and also the anti-IL-36 antibody has shown some activity. And as our anti-IL-1 rep antibody inhibits in total six different cytokines of the IL-1, IL-33, and IL-36 antibodies,

isoforms we believe that this combination has a great potential in this indication thank you thank you there are no further questions at this time i would now like to turn the conference back to pablo divazon for closing remarks

Thank you very much, Sandra. As there are no further questions, ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.