Almirall, S.A.

Good day and thank you for standing by. Welcome to the Admiral Full Year 2025 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Pablo Dibason, Head of Investor Relations. Please go ahead.

Thank you very much, Sandra, and good morning, everyone. Thank you for joining us for today's quarterly earnings update and review of Almirals' full-year 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 risk, 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, Carlos Gallardo, Chairman and Chief Executive Officer, John Garay, Chief Financial Officer, and Carl Sigabar, Chief Specific Officer. Carlos will start with the guidance and business highlights of 2025, followed by an update specifically on biologics and the key growth drivers of our medical dermatology portfolio. Carl will provide you with an update on the pipeline and R&D programs. John will then walk 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.

Good morning to everyone in the call. Before turning to the highlights of the year, I'm pleased to report that we met our 2025 guidance in line with our mid-term outlook. For 2025, we guided for net sales growth of 10 to 13% and delivered closer to the upper end with 12.4%, bringing net sales to 1,108 million. On profitability, we expected everything in the range of 220 to 240 million, and we closed the year at nearly 233 million, comfortably within the range. Turning now to 2026, I'd like to share our guidance, which remains aligned with our medium-term targets. We expect net sales growth of 9% to 12%, and EBITDA in the range of $270 million to $290 million. With that, let's revisit our midterm guidance on the next slide. We are pleased to reiterate our midterm guidance, which remains unchanged. Between 2023 and 2030, we expect to deliver a double-digit compound annual growth rate in net sales and reach an EBITDA margin of around 25% by 2028. Together with the new 2026 guidance, this confirms our confidence in both short and medium term. Please turn to the next slide on the 2025 highlights. Almirai delivered solid performance in 2025, in line with our expectations. exceeding for the first time 1 billion euros in net sales. Growth is supported by successful commercial and operational execution, particularly in the sales and biologics. We continue to deliver innovative treatments, broaden access for patients, and support our physician community. Illumetri continues to deliver steady growth, reaching 234 million in sales, and is on track to achieve peak sales of over 300 million. Eblis maintained a strong momentum during 2025, as the rollout is now complete in all key European geographies, and these markets begin to scale. The good performance reinforces our confidence in the product's positioning and growth potential. Regarding our products, Winthora keeps its leading market share in key countries, while CliCity maintains a strong performance across Europe. During 2025, we have focused on continuing the development of our strong presence in the medical dermatology field. We presented at major events such as the 2025 annual AAD meeting, and we reinforced our presence at the 2025 European Academy of Dermatology and Venerology Congress in Paris. On the clinical side, we're excited about the new developments in our pipeline. We have initiated three phase two proof of concept studies, and three other POC studies are on track to enter phase two in the upcoming quarters. Most of these assets are either first or best in class. CAR will soon provide a full update on the recent developments in our pipeline. Please move on to slide 9 for an update on our biologics portfolio. In 2025, Illumetri net sales reached $234 million, representing a steady 12% year-on-year increase. The brand continues to perform consistently and we remain firmly on track to deliver the more than 300 million pixels in excess. Even at both the product and the IR23 class move into a more mature phase of their growth cycle. Illumetri remains well positioned within the psoriasis market, maintaining its market share and remains one of the leading therapies within the class. A successful launch of the 200 milligram formulation thereby strengthening the product's competitive profile and supporting long-term growth. Additionally, the two-year positive study results presented at EADB 2025 further demonstrate Illumetri's long-term value, highlighting meaningful real-world benefits in patient well-being and reinforcing the product's clinical and commercial relevance. Please move to the next slide on EPLIS highlights. Eblis continues to be the most successful atopic dermatitis launch in recent years. Since its approval in Germany in December 2023, it has quickly become our second best selling product. The advanced therapy segment in India across the EU five nations continues to expand rapidly at around 30% growth annually. Full-year sales more than tripled to 111 million, up from 33 million in 2024, reflecting the successful European rollout, with healthy scaling across all key markets and encouraging early traction in new country launches. This gives us strong confidence in Eblis as a major growth driver in the coming years. Patient and physician acceptance, along with good commerce and operational execution, have been key elements to achieve this result. Clinically, our collaboration with Lilly remains highly productive. At EADB 2025, we presented a wide set of labrachytum update, including real-world evidence, long-term results up to three years, patient-reported outcomes, and safety data, all showing rapid and sustained efficacy and reinforcing its differentiated profile. Please turn over to the next slide. We are working closely with our partner, Lilly, to build a growing data set for EGLIS through a series of synergistic post-phase three studies on delivery. The objective is to strengthen the evidence base through lifecycle management, supporting broader patient access, expanding our market presence, and exploring additional indications for these advanced treatments. As part of this effort, Almeida recently initiated a new phase three study in pneumo-rexema, Carl will provide you with additional details in the following section. Additionally, we will be conducting a face-to-face study to further strengthen the profile of the product. Let me turn it over to Carl for the pipeline update.

Thank you, Carlos, and good morning to everyone on the call. This slide gives an overview of our lifecycle management activity for products that are already commercialized And I would like to highlight the progress we made in recent months. Cesara was approved in China end of last year. We have also signed a partnership agreement with to commercialize Cesara in China, strengthening our presence in this important market. Together with our partners, Sun Pharma and Eli Lilly, we continue to advance in label expansion opportunities for Illumetri and Epclis, respectively. Carlos has already shown what we expect in terms of clinical data flow for leprichizumab. The next readout will be the week 16 data of the Adorable One study, which we expect to share in the coming week. The durable one explores the safety and efficacy of lepricizumab in patriotic patients with moderate to severe atopic dermatitis. As mentioned earlier, Almiral will also explore lepricizumab in pneumolar eczema. Next slide, please. Pneumolar eczema is a chronic inflammatory disease with a high unmet medical need. Treatment is largely limited to topical therapies, which often fail to provide adequate disease control, and there are currently no approved systemic treatment options. R13 is hypothesized to be a central cytokine, not only for atopic dermatitis, but also for pneumolexema. Given the proven efficacy of leprechizumab in adductor metitis, we believe there is a strong rational or meaningful symptom relief and quality of life improvement in patients with pneumolar eczema. We expect to start enrolling patients in Q2 2026. Next slide, please. This slide shows you the status of our early and mid-stage pipelines. Today, we have three proof-of-concept Phase II studies ongoing, with three additional studies planned over the next 12 months. In 2025, we progressed our anti-alvin rep antibody into Phase II for Hidradenitis superativa and our R2 mutant fusion protein for alopecia areata. In addition, our partners initiated a Phase II study of the IL-2 mutant fusion protein in atopic dermatitis. As a reminder, we retain global rights for this asset outside greater China. Looking ahead, we plan to initiate one additional proof-of-concept study each for the IL-2 mutant fusion protein anti-anti-IL-1 rep antibody in an inflammatory skin disease. The anti-IL-21 antibody we plan to explore in Hidradenitis suppurativa. We also expect our bispecific antibody for atopic dermatitis to move into phase one in the coming months. Furthermore, we have started preclinical development for an oral small molecule targeting TH2 diseases and a new approach using mRNA LNT technology for non-melanoma skin cancer. Let me show some more details on the most advanced projects on the next slide. For Hidradenitis suppurativa, we have two programs. The anti-AL1 rep antibody has recently entered phase two, and the anti-AL21 antibody is expected to start proof of concept in the coming months. The anti-IL-1 rep antibody blocks anti-IL-1 rep inhibits signaling across the IL-1, IL-13, and IL-36 pathway. Inhibiting these pathways concurrently is intended to support deeper suppression of the inflammation, and the relevance of the IL-1 and the IL-36 pathways in hidratinitis suprativa is supported by existing clinical evidence. The second program targets R21 and is designed to modulate both B and T cell activity. We believe that this dual strategy targeting two distinct inflammatory pathways has the potential to provide meaningful differentiation compared to current treatment. Please change to the next slide. The R2 mutant fusion protein has ended phase two development in alopecia areata. Alopecia areata remains an area of high unmet medical need with fewer than 30% of patients achieving a satisfactory symptom response with currently approved therapy. The disease has a prevalence of approximately 0.1 to 0.2%. a lifetime incidence of around 2%, and 44% of cases are moderate to severe. It is also the third most common dermatosis in children. AL2 mutant intrusion protein is designed to selectively expand regulatory T cells with the aim of rebalancing the immune system. This mechanism is intended to support immune tolerance, addressing the underlying autoimmune component of the disease rather than only its symptom. From those six proof of concept phase two studies, we anticipate data results over the next couple of years, starting end of 2026, beginning of 2027. While these programs remain at an early stage, they address well-defined biological pathways and represent a range of first or best-in-class approaches. In summary, our investment over the past few years is beginning to translate into tangible progress in our pipeline. With that, I will hand over to John for the financial review.

Thank you, Carl, for the update on our R&D programs and pipeline, and good morning, everyone. As Carlos mentioned earlier, companies' consistent execution continues to translate into solid, tangible results. In 2025, Admiral delivered a strong performance, with net sales growing over 12% year-on-year, achieving our 2025 guidance. Our European dermatology portfolio remained the key growth engine, further reinforcing Almiralt's path towards leadership in medical dermatology. Gross margin for the year reached 64.4%, reflecting continued royalty pressure from erometric royalties, partially offset by the Q1 2025 divestment. EBITDA came in at 233 million euros, up 21% year-on-year, driven largely by strong top-line growth that outpaced S&A. As expected, S&A increased 7.9% to 501 million euros, with Q4 reflecting the previously announced uptick. R&D investment grew by roughly 11%, representing 12.5% of net sales, fully aligned with our annual targets and guidelines. We closed December with a net debt to bid ratio of zero. During the final quarter, we successfully completed the issuance of a new high yield bond at a 3.75% interest rate, a level that reflects the strong trust Admiral has built among financial markets. Company long-term credit rating by Standard & Poor's was improved to BB+, very close to investment rates. Our strong balance sheet gives us meaningful flexibility to pursue licensing opportunities and targeted both on acquisitions as and when attractive opportunities arise. Overall, these results strengthen our confidence in delivering full-year 2026 guidance and the mid-term outlook we shared earlier. Let's move now to the details of our sales breakdown on the next slide. The European dermatology business delivered a strong performance with net cells up 25.6% year-on-year in 2025. Additional details will be shared on the next slide. In general medicine and OTC, European cells included the divestment of Algidon and the outlicensing of Sekizan. A softer allergy season for Revastel and lower sales of cardiovascular products such as Crestor, were largely offset by a solid contribution from Eclira. Performance in the U.S. declined, and further details will be shared on the next slide. In the rest of the world, overall sales were globally stable, with rapid growth in dermatology offsetting a decline in general medicine. Let's take a closer look at the dermatology business on the next slide. Our European dermatology business continued to prosper positively. Illumetri maintained its healthy year-on-year growth, while Eggblitz further strengthened its role as our primary growth engine. At the same time, we continued to build relevant market share for Clyde City and Winsora, with both products continuing to gain traction across key European markets. Eggblitz delivered €111 million in 2025, pitting a slightly consensus as European markets continue to scale up, following launches in all key countries. This performance reinforces our confidence in its robust long-term growth potential. Across the rest of the portfolio, Cyclopolis sales remained broadly stable, and Stillerance posted a solid improvement versus 2024. In the U.S., performance declined year on year. While Clixiri's large field launch continued to deliver some growth, these gains were offset by ongoing pressure on the legacy portfolio. Products such as Chorda and Pei, Tanzorak, and Axon remain affected by persistent genetic competition. In addition, Seysara sales declined, driven mainly by intensifying competition in the oral antibiotic segment for acne. In the rest of the world, dermatology sales increased year on year, supported by portfolio momentum and a minor contribution related to the recent Seysara partnership agreement in China. Overall, the performance of our dermatology franchise remains strong. Let's now review the remaining elements of the P&L, starting with some of the ones mentioned earlier. Gross margin came in at 64.4% in 2025, 30 basic points lower than prior year, reflecting margin pressure mainly due to higher relative years associated with elumetrics growth. R&D spending represented 12.5% of net sales, broadly in line with last year and guidance. SG&A expenses increased 8% year-on-year, driven by ongoing support for Eblis launch across new markets and continued investment behind our key brands. As we highlighted previously, SG&A picked up in the final quarter due to some seasonality in the second half and ended aligned with expectations. Financial expenses improved versus last year, supported by a 12 million euros positive impact from the equity swap valuation, reflecting share price gains year-to-date. Finally, our effective tax rate ended at 38%, an improvement by 24 basic points versus prior year, driven by the strong increase in the group's overall profitability, which materially reduces the relative impact of our U.S. business at the consolidated level. Please move to the next slide to take a look at the balance sheet. Our balance sheet remained very stable in 2025 compared with previous year. Capital expenditure well elevated in the final quarter, mainly reflecting the Illumetri sales milestone of nearly 50 million euros, recently extended collaboration agreement with CIMSIR, capitalization of EBLIS R&D programs, and pipeline progress achieved in prior quarters. This increase was more than offset by higher depreciation, which resulted in a decline in goodwill and intangible assets. Our net debt ratio remains close to zero, providing us with a strong financial flexibility to pursue inorganic growth opportunities. The reduction in net debt primarily reflects solid cash flow generation in the third quarter. Let's take a look at the cash flow statement next. Companies' free cash flow more than doubled in 2025 compared to last year. Cash flow from operating activities reached €174.5 million, an increase of €17 million versus prior year. It was mainly driven by a more than two-fold increase in profit before taxes, partially offset by higher working capital needs linked to the growth in biologics volumes with the rollout of equities in Europe. Cash flow from investing activities was minus 127 million euros, an improvement by 13 million euros compared to the previous year. It reflects lower investment outflows versus prior year, which included the 45 million euros in the metricized milestone, as well as milestone payments related to EBLIS, Winsora and Pipeline Progress. Cash flow from financing activities amounted to minus 87 million euros, representing higher outflows versus the minus 31 million euros recorded in 2024. The difference is mainly explained by the refinancing of the senior notes, where the variance in nominal amounts combined with issuance costs had an impact of roughly 55 million euros. In addition, we recorded a higher cash dividend selected by shareholders, which was partially offset by the positive 12 million euros equity swap impact supported by the increase in our share price. I will now give some more color on our 2026 guidance. We anticipate quarterly performance to strengthen progressively as the year advances. In the first quarter in particular, while being positive about the underlying growth of our business, we are going to face a tough comparison, considering the divestment of Algidol and the licensing of Sekisan during the first quarter last year. Regarding the details of the 2026 guidance, I would like to outline some assumptions used regarding the rationale behind provided ranges. As in every other year, we have four main elements that may impact both net sales and EBITDA. Firstly, the speed and level of penetration of biologics in the overall market. Secondly, underlying market growth and competitive dynamics. Thirdly, performance of the legacy portfolio. And lastly, potential opportunities that may arise through portfolio management strategies. Any changes in these elements may influence the performance within the reasonable range we have announced this morning, with 10.5% as midpoint of net sales growth at 280 million euros as midpoint of EBITDA level for 2026. Other than that, we are positive about ongoing performance of the business and confident in delivering a good set of results for 2026, driven mostly by our newer products and biologics. We feel comfortable with market expectations for our biologics in 2026. Checking Bloomberg or Visible Alpha sources, Illumetri seems to be in the range of 260 million euros, and Ebly seems to be in the range of 180 to 190 million euros. At the same time, we reiterate our mid-term guidance of double-digit agar growth in the period 2023 to 2030. In 2026, we will continue to experience a slight gross margin pressure given increasing royalty rates, particularly for Illumetri. R&D investment is expected to stay at the level of 12% to 12.5% relative to net sales. And in 2026 and going forward, we continue expecting net sales to grow faster than the SG&A. As we have seen in 2025, now Eblis has already been launched across Europe. Regarding the tax rate in 2026, It should continue going down toward the mid-20s target by 2028 as a strong increase in the group's overall profitability materially reduces the relative impact of our U.S. business at consolidated level. With this, I would like to thank you all for your attention this morning. I will pass the word to Carlos for his closing remarks.

Thank you, John. Building on the strong achievements of 2025, let me highlight the momentum we are now carrying into 2026 across our biologics pipeline. We are well positioned to lead in an expanding dermatology market, supported by a broad and highly relevant portfolio. Our pipeline includes disruptive potential programs across immune-mediated skin diseases, rare dermatology, and non-melanoma skin cancer. Today, we already have three studies advancing through proof of concept and phase two, with three additional programs expected to start in the coming quarters. That gives us strong scientific foundation and a clear path to sustainable value creation. At the same time, we continue to evaluate opportunistic bolt-on acquisitions in commercialized assets and remain active in pursuing early-stage licensing opportunities in promising advanced therapies. Importantly, we are turning strategy into results through rigorous execution. Having delivered fully on our 2025 guidance, we remain firmly on track to achieve our mid-term targets of double-digit sales growth and a 25% EBITDA margin. The average launch continues to scale strongly across Europe, while we effectively manage Illumetis' transition into its more mature growth phase. We are committed to shaping leadership in medical dermatology in Europe, turning innovation into growth and delivering lasting value for patients and shareholders. With this, we conclude the presentation, and I hand it back to Pablo for the Q&A session.

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. And the first question comes from the line of Shan Hama from Jefferies. Please go ahead.

Hi there. Thanks for taking my questions. Two from me, please. So firstly, what is factored into the top and bottom end of the net sales guidance for 2026? And then secondly, If I can push you a little bit, why is the bottom end of the guide 9% when the midterm guide is double digit? Is there any way you can reconcile that? Thanks so much.

Thank you, Sian, for the question. Let me, for this caller, I think John can take this question.

Absolutely. Thanks a lot, Carlos, and thanks a lot, Sian, for your question. I think all questions can be replied basically the one for the low range. As you know, usually the management portfolio strategy is part of our guidance. But as I have said during my script, in Q1 2025, we had the opportunity to execute two transactions. One was the divestment of Agile, and the other one was the licensing of SecuSAL, computing for around 12 million euros in Q1 2025, and around 15 million euros on a full year basis. In order to be able to overcome the double-digit growth, we also need to replicate these two transactions or even more to compensate that amount of volume. So, this is what it makes the low-range guidance, that perhaps we are not able to close these two transactions in the same way. Moving to the high-range, basically, it means the other way that we are able to close two or even one, but basically, that we are able to accelerate in the high range of provided guidance. These are basically the main levels for the low and the range, Sean.

Thanks so much. Thank you. We will now take the next question from the line of Francisco Ruiz from BNP Paribas. Please go ahead.

Hello. Good morning. Thank you for taking my question. I have three questions, very quick ones. The first one is you could give us an update on your big sales that you spent on and we saw right now they are gaining some weight on your P&L. The second one is you could give us some detail on, say, on China and how much will contribute in the future for you. And then, there are some question on modeling. I mean, you commented on reducing the tax rate towards the 20% target. Could you give us more detail for next year and also the milestone payment that you expect in 26 and 27? Thank you.

Francisco, thanks for your questions. So, we are not providing a review on PIX-S projections for Glyceria winthora at that stage. I think both brands are progressing extremely well. We're happy with the progress, particularly in Europe. Seisara partnership, we are pleased of the approval. We're pleased of the partnership. The contribution at that stage, we prefer to be prudent and we think it's going to be modest. And the modeling part, I'll pass it to John. I'm sure he will do a much better job than me.

Yeah. Can you please repeat the question about the modeling part, Francisco?

Yes. I mean, so one is about the tax rate for next year, although you said that we should see 20% or mid-20s percent in the medium term, but for next year more specifically. And also on the milestones cash out, which we expect . Yeah, thanks.

Regarding the effective tax rate, yes, during my script, I have said the expression that by 2028, we expect to be in the range of mid-20s, and we will continue going into that direction. Guidance for 2026, we should expect a reduction. At least I would say mid-double digits is our intention to go in that path as we increase the group overall profitability. Regarding the other aspect about the CAPEX payouts, reasonable investment CAPEX, excluding recurring CAPEX, will average around 70 to 75 million euros in the upcoming years, excluding potential additional in-licensing needs. Basically, this covers milestones for in-licensed assets. When we talk about ordinary CAPEX, ordinary CAPEX are expected to be in the range of around 70 to 80 million euros in 2026. and then go down in the upcoming years as we have some ongoing post-phase three studies that are capitalized, as Carl has mentioned during his script, together with IT projects, industrial capex, and other minor things.

Okay. Thank you very much.

Thank you. We will now take the next question from the line of Jaime Escribano from Franco Santander. Please go ahead.

Hi, good morning. Yeah, a couple of questions from my side. In terms of gross margin, what should we expect based on the product mix? I guess Erglysan and Illumetri licensed products are putting a little bit of pressure there. And my second question would be on Almiral Legacy. So there is 12 million one-off in 2025. So in 2026, what should we expect from the rest of the portfolio, if you can give us a little bit of color on the different moving parts there. Thank you.

Thank you, Jaime. So let me take the second question, and then I'll pass it to John for the cross-margin question. So as we have shared with you on a number of occasions, we have a big product portfolio on the legacy bit. Our goal is always to to keep an optimization strategy. That meaning if we see an opportunity to acquire something where we can add value, we do so, as we did two years ago. But also if we think that we are not the best owners of a certain asset because we are not promoting it and someone comes in and offers us a superior value than the value that it has in our hands, then also we divested it. And this is the case that we've done in Q1 last year. So it's difficult to make projections on this because this is business development, but our strategy will be to keep optimizing this portfolio, and it might entail some maybe small minor acquisitions or might entail some, again, divestitures. But it's difficult to anticipate any specific transaction at this point.

John, you want to take the gross margin question? Thank you very much, Carlos, and thanks for your question, Jaime. So regarding the gross margin expectation for next year, please let me start saying that the gross margin you may appreciate in Q4 has been lower than expected, and it doesn't represent what you should be expecting. The margin in Q4 came in at 62.8% as a consequence of an accrual to cover potential inventory write-off related to quality observation in same-time batches for minor products. Having said this, why not? We should expect certain pressure taking the margin down for next year. We don't disclose guidance, but in my earnings call of Q3, I said that the Q3 margin we disclosed could be a good proxy for next year, something in the high 63% could be used as a base. And then coming back to the point of the 12 million euros milestone you have commented, I linked to this in the reply to Sean, that we need to overcome it to be able to deliver WGK growth this year as well. And that's why we have provided the range. But having said that, let me reiterate, that we are fully convinced about the 10.5 midpoint of guidance on net cells we have provided this year. We feel comfortable with the market expectation for 2026 for our biologics, and we reiterate the mid-term guidance of our DGK growth between the period 2023 to 2030.

Thank you very much.

Thank you. We will now take the next question. from the line of Guillermo Sampaio from Kaiser Bank. Please go ahead.

Hello. Thank you for taking my question. .

Guillermo, this is Pablo. We cannot hear you. We cannot hear you very well.

Hello? Yes? Now better?

Yes.

Yes, now better. Go ahead, please. Okay. Sorry. So thank you for taking my question. So the first one for Carl, if you could comment on the relevance of IL-13 in the cascade of pneumolexema versus atopic dermatitis. And then two ones related to financials. The first one in terms of phasing of the growth for next year, I already mentioned that the Q1 is going to be below the average. Just wanted to understand how do you expect this to evolve in the remaining quarters? And the third one, if you could provide a bit more details in terms of QI series, so there was some step up in terms of sales in this quarter. Just wanted to understand how this should unfold over the coming quarters. Thank you very much.

Carl, you can go straight to question one. Thank you, Guillermo, for the question. I think that pneumolar eczema is a disease that is different from ID. Sometimes there is certain co-morbidities or certain co-occurrence, and it's characterized by pruritic, discoid-shaped, well-demarcated erythematous lesions that frequently occur both on the arms and the legs. R13 is hypothesized to be a key cytokine in both indications, and therefore we believe that we have a good chance to see with leprechaun a meaningful treatment effect in this patient population. It is a disease where the prevalence is estimated between 0.1 and 9%, so there is a lot of variability reported. We believe it's at the lower end, and we think, you know, addressing this high medical need indication is a good opportunity both to help these patients but also to expand the use of levacizumab.

John, you want to take number two and number three then?

Yes. Thanks a lot, Carlos. So, in terms of facing, yes, in Q1, we will face a tough comparison. I have already disclosed that we will be competing against a very challenging Q1 2025, where we reported the divestment of AlgaeDoc and the adolescence in Oksaki-san for about 12 million euros in that specific quarter, so 15 and a half years. Once we pass the Q1, Q2, we will come back, we will more normalize but definitely the growth will accelerate in Q3 and Q4. So we expect a stronger second half of 2026 versus a softer in half in 2026 due to this direct effect. And then the third question was about Clyde City. Yes, I mean, Clyde City has basically three lakes, Europe, U.S., and global. In the area of Europe, we have seen a good commercial execution that has driven the new results. Nothing to compare. We work with a long-term vision, so some quarters can be better, some quarters can be not so good. We are pleased with the performance of the product in Q4, but nothing specifically to mention. Regarding the rest of the world, we have mentioned during the script that there is a minor contribution in other countries. For example, we signed The agreement with one partner in Asia Pacific during Q4, and it gave us some access. It's a testimony to the strength of scientific value that glycerin brings to patients, the fact that they are global partners, that they want to collaborate with us in territories that we do not operate. And then in the case of in the U.S., the performance in the border has been impacted by the effects, right? Well, you see our NANDES reporting for Q4. They are negative by 9% by the reality. The U.S. team is doing a good job, and in terms of volumes and dollars, we are growing in low single digits. The Euro-U.S. dollar FX rate has had an impact in this case in Q4 isolated. Last year, the average was 1.15 to 1.17, while in Q4 2025, we are in the range of 1.05, more or less. Thank you.

Thank you. We will now take the next question from the line of Damien Chaplain from Stifel. Please go ahead.

Yes, hello. This is Damien. I congrats on the results and thank you for taking my questions. I have a first question on your midterm guidance. So you have guided to a 25% EBITDA margin by 2028. But given that gross margin will remain under pressure and DNA is already well optimized, what specific sources of operating leverage will support reaching your 2028 target? So this is my first question. And second one on AbGlyph, could you provide some colors on what could be the market size for a pneumolar eczema? and when should we expect the phase three readout?

Thank you. Thank you, Daniel, for the question. In terms of the midterm guidance, yes, there will be operational leverage, and that's where it's going to come, this margin expansion. And again, as we've mentioned in previous calls, we've done all the investments that we needed in infrastructure to maximize the value of these assets. So, we don't plan to increase or continue to invest in this type of infrastructure. And, of course, we're also spending productivity gains on SG&A. So, overall, we are very comfortable with the guidance provided, and we are comfortable that we will deliver on these margins. On it, please.

Can you comment, Carl, perhaps? Yes, I'm happy to comment. So, as mentioned, the study will in rotation in Q2 this year, and we expect readout in the 2029 timeframe. So far, this indication has not been included into our Q3 guidance.

Okay, thank you very much.

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 on the rate of growth of EPLIS. You've been having roughly 5 million of incremental revenue every quarter. I wanted to know how much of this comes from new launches and how much comes from growth mainly in Germany. My second question is on working capital. You have invested quite a bit in working capital this year more than in previous years. It doesn't seem to be inventory-bound up because I see that your level of inventory is roughly stable. I don't know if this is just a seasonal thing of how some payments ended up at the cut-off date on 31st December or if there is any fundamental reason driving this working capital and if we should see similar investments into working capital in 2026. And my last question would be on capital allocation. You're generating cash. The payments going forward are likely going to be lower than in the past few years in terms of milestones. So capital, cash flow generation should increase. So we were a bit surprised to see the issuance of an additional bond. So I don't know if you see Plentiful investment opportunities, or otherwise, why are you not reducing your debt levels? Thank you.

Thanks for the questions, Álvaro. In terms of the rate of growth for EPLIS, we're seeing strong contribution from all countries. We are in all the countries where we've launched, we've seen double-digit penetration in terms of dynamic market share. Lately, we've seen also increased acceleration in terms of growth in some of the latest countries where we have launched, such as Italy and France. So overall, very pleased with the rate of growth, very confident, very homogeneous across countries. So that gives us total confidence on delivering on our pixels estimate. On working capital cash flow, John, do you want to take those questions?

Yeah. Thanks a lot, Carlos. Thanks a lot, Alvaro, for your question. Regarding your question about working capital, you are spot on. It's basically facing seasonality of collections. This has happened this year. It's not structural, so we will not see the same increase in the years to come. And then the third one, which is capital allocation and why we did the bond. First of all, this started with a transaction of the voting cell that I think we were able to obtain a very good price in the current environment. And I feel this is the steam on it of our prudent financial approach and the good performance of the company. But having said that, I think the bond is very important for us because it represents the commitment to maintain a solid liquidity position to keep investing in early-stage R&D deals and Bolton acquisitions as and when they come up. It may be in short-term, it may be in mid-term, but we want to have this flexibility to execute. That's why we executed the bond, and that's why we reduced it from the prior 300 to the current 250 because we also believe we are going to generate positive cash flow in the upcoming years.

Thank you. Thank you.

We will now take the next question. From the line of Joaquin Garcia Quiroz from JB Capital, please go ahead.

Yes, hello. Thank you for taking my questions. It's just on the alopecia areata and hydradenitis suppurativa. If you could give us a bit more color on the market that you see for this or maybe number of patients, if you can. And is this – do you expect this to be with a similar size of that, please? Or we should expect this to be – significantly lower than the net increase in the contribution for Almiral. And lastly, when should we expect the readouts for these studies? Thank you.

Thank you, Joaquín, for the questions. We are very excited about our alopecia areata and two of the HS programs that we have in place. Why? Because, one, it's an area of tremendous unmet needs. lot of still patient suffering with inadequate treatments for these conditions. And secondly, we believe that we have our treatments that are now in phase two have the potential to really transform the standard of care and become first line for patients. In terms of how many patients out there, their prevalence data, maybe Carl can help me here with some data. It is important to note that for all programs in our pipeline, we have global rates. So if you compare it to what we have today, we have European rights. So probably these indications are of lesser prevalence, but we have worldwide rights. So the potential is way higher than what we see with today. And that's why we're super excited, the opportunity to help patients, but also create a significant opportunity from a financial perspective to the company.

Can you? Yes, I'd be happy to add a bit more color. So alopecia rata, as Carlos mentioned, is an indication of high unmedical needs. The only available systemic treatment are check inhibitors with not only their known challenges around their side effect profile, but also it is reported that, you know, once this treatment is done, recurrence rate is very high, which has a very significant impact as You know, once hair fall out again, it takes like three months to regrow. The prevalence is 0.1 to 0.2%. As mentioned, it's also an important indication for children. And the market size is estimated to be around, let's say, 1.4 billion by Elevate Pharma in 2030. Yeah. HS, again, another area of high unmedical need. Currently available treatments seem to be rather having a modest effect. What experts have told us is due to the complexity of the disease, it's recommended to think about inhibiting multiple pathway and not only a single one. And that is what we're doing with both of our assets. The prevalence is estimated between 0.4 and 2%, and, you know, with the potential higher prevalence in the U.S. and especially in Afro-Americans, and the estimated market size by Evaluate Pharma is about 5 billion in 2030. Thank you, Karin.

As a reminder, 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. So two follow-up questions from my side. One, if we look to regarding the guidance 2026, if we look to the consensus right now, for example, visual alpha in EPLIS is 188 million. And in the case of Illumetri around 260 million, I would like to ask how comfortable you feel with these numbers. And the second question more for Carl, within the three products you guys have in phase two right now, what is the one you are more excited if you had to pick one in terms of potential efficacy and probability of being successful.

Thank you. Thank you, Jaime, for the follow-on questions. On the guidance for our biologics, we feel very comfortable with the figures that you have mentioned.

And just go to Carl to . That is always a very difficult question. Now, you know, we are talking about the 2S1 and NTL1. antibody, and the reasons why we are so excited about this antibody, that antibodies that have targeted individual components, for example, one against R1-alpha and R-beta, but also another one against R36, has shown some initial efficacy in this disease, and we believe combining those two activity has the chance for, let's say, improving the efficacy. On the IL-2 mutain, that is a completely novel mechanism stimulating regulatory T cells. And what makes us optimistic is that there is evidence that this mechanism could work in both diseases, alopecia areata and atop dermatitis, based on initial studies that come from low-dose IL-2, but also from competitors without using a peculated version of IL-2. So, in summary, both are very exciting programs, and we look forward to then having, starting with our end of 2026, beginning of 2027. Thank you.

Thank you very much.

Thank you. There are no further questions at this time. I would now like to turn the conference back to Pablo de Bazón for closing remarks.

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