Galderma Group Ag U/Adr

Welcome to Goderma's 2025 third quarter trading update call. As customary, the press release was published at 7 a.m. Central European Standard Time today and can be viewed on our corporate website at any time. Today's presentation slides, as well as a recording of the webcast, will be made available on our website after the call. Please be advised that today's presentation contains forward-looking statements, which should be treated with the appropriate level of caution as advised on the slide. Let me now introduce today's trading updates webcast. Dr. Flemming Ornskov, CEO of GoDerma, will provide performance highlights for the third quarter. Thomas Dietrich, CFO, will then present the trading update and the financial outlook for the full financial year. Both Flemming and Thomas will be available to answer questions from financial analysts before Flemming provides his final remarks to close the webcast. With this, I would like to invite Flemming to start the GoDerma's highlights for the third quarter of 2025. Flemming, over to you.

Thank you, Emil. Good morning, good afternoon, and welcome to Gelderma's third quarter 2025 trading update webcast. In a year of opportunities, we delivered record net sales for the first nine months, along with strong commercial and innovation momentum across our portfolio. For the first nine months, Gelderma delivered 3.7 billion US dollars in net sales. These results are ahead of expectation, driven by focused execution of both the existing portfolio and new innovation. Growth was driven primarily by volume, complemented by favorable mix. For the period, net sales growth was up 15% year on year at constant currency. Growth for the third quarter was up 21% year on year at constant currency. This represents an acceleration across all geographies and product categories, despite challenging market dynamics. The growth was especially strong for Nemluvio in the U.S., while newer modulators benefit from some favorable facing in the third quarter. Based on our strong growth trajectory across the portfolio and Nemluvio's performance, we are raising our full year guide. For net sales growth, we expect to close the year between 17 and 17.7%. For core EBITDA, we expect a margin between 23.1% and 23.6%, both at constant currency. Our performance demonstrates our ability to deliver growth through commercial excellence, innovation, and global expansion. Let's look at some highlights by product category on the next slide. Galderma continues on its strong growth momentum with net sales growth acceleration in the third quarter across all product categories and geographies. Galderma achieved double-digit growth in both injectable aesthetics and therapeutic dermatology, reflecting broad-based growth momentum and successful commercial execution for the first nine months of the year. Dermatological skincare continued on a strong trajectory, especially in international markets. Globally, all three product categories outperformed their respective markets. Both geographies delivered double-digit growth, as did most of Galderma's top 10 markets. Our performance reflects focused commercial execution across our core business as well as incremental growth opportunities, as you'll see on the next slide. Let's start with injectable aesthetics, focusing on our newer modulator portfolio. Our next generation newer modulator, RalphieDesk, continues to ramp up well in the 17 markets where it was already launched. Feedback remains very positive, and we are progressively gaining market share, mainly from competitors. I'm happy to share that we received three new approvals for Ralphie DES in Hong Kong, New Zealand, and the United Arab Emirates. This last one arrived just in time for us to showcase Ralphie DES at the Aesthetic and Anti-Aging Medicine World Congress in Dubai. The Congress took place in early October, and you can see some visuals on the right side of the slide. There was a lot of excitement. We look forward to the launch next year in a market where we currently do not have a neuromodulator offering. We also completed multiple additional RaffiDesk submissions globally, progressing in our plans to have the broadest neuromodulator portfolio globally. The neuromodulator subcategories overall has been performing really well with market share gains in the US and in international markets. If we focus on the European countries where Ralph Fidesz has launched, we see early signals demonstrating the strength of our newer modulator portfolio strategy. Over the past 12 months, our newer modulator portfolio gained 490 basis points of market share. And in the third quarter, the portfolio delivered double-digit growth, with Dysport growing well and Ralph Fidesz continuing to ramp up. Moving now to fillers and biostimulators, where we continue to invest for growth. We gained further market share in fillers and biostimulators in international markets and in the US. Restylane continued to be impacted by a soft filler market, while Sculptra maintained a very strong growth trajectory with double-digit growth across geographies. I would like to showcase two specific efforts which are stimulating growth for this category. Global activities on our proven injectable treatments for improving facial appearance after medication-driven weight loss. We believe that we're best positioned in this space with our clinically proven portfolio of sculpture and the full Restylane range. We provide a leading education and training for healthcare professionals, leveraging the first-of-its-kind clinical trial data focused on patients' experience in patient volume loss associated with a medication-driven weight loss. We also commissioned clinical consensus guidelines, which set a standard approach for identifying and managing the unique needs of this patient population. And in the US, we launched a significant direct-to-consumer campaign called Sculpt and Lift, targeting patients on GLP-1 treatments. We believe this is an important opportunity to increase demand for the Galderma offering As the campaign aims to bring medication driven weight loss patients to aesthetic practices. This includes patients who may not have been aesthetic users before. Second, we continue to scale reasonably large differentiated innovation. This includes the ramp-up of Restylane shape in Brazil, which created a total new segment. As a bone-mimicking filler, it offers an outcome which could previously only be achieved with invasive plastic surgery. The launch continues to progress strongly, with a positive halo effect on the rest of the portfolio of Restylane in the market. The other significant launch was Sculptra in China, which is on a very strong growth Our Chinese team has been executing an exemplary omni-launch strategy to increase awareness and penetration. Two of the achievements I find particularly impressive. Over 100,000 units were sold in the first six months of the launch. Sculptra is already the number one search brand in bio-stimulator locally with over 200 million impressions. Switching now to Dermalogical Skincare, we continue to focus on the core of our business while also introducing new innovation to capture opportunities for further growth. Starting with Cetaphil, we further expanded its range to address white spaces. This included two totally transformative launches in the US, creating entirely new categories based on proven science. The skin activator hydrating and firming line. It marks an entirely new skincare category of advanced hydration and firming solutions, designed specifically to improve the appearance of aging, thinning, and fragile skin. This also marks our first step in strengthening our position in the faster-growing hands and body lotion segment, where we historically have been underrepresented in the U.S. Second, the nourishing oil-to-foam cleanser represents a breakthrough in hydrating cleansers for sensitive skin. This first-of-a-kind formula is designed to deeply cleanse while preserving hydration and supporting the sensitive skin's moisture barrier. As the essential first step in any skincare routine, it also removes sunscreen and makeup, making it ideal for double cleansing or as standalone use. In addition, GALBERMA continued to roll out recent innovation in international markets. This includes multiple Cetaphil lines, especially in the fast-growing Asian and Latin American markets. We're also using these to strengthen our position globally and capture local opportunities. For example, the gentle exfoliating SA line was launched in China, strengthening our offering in the face segment. For Elastin, the preferred period procedure skincare brand in the US, we broadened our reach and leveraged synergies with our injectable aesthetics portfolio, following an launch for our partnering healthcare professionals, we initiated a broad consumer outreach for our restorative skin complex with next-generation TriHex technology. This has been another successful launch, turning the improved formula into one of Elastin's top-selling products. It also received Elle magazine's Feuder of Beauty Award for top skin tightening cream, reinforcing its position for medication-driven weight loss patients. Second, we continue to expand and international markets for the launch in China were excited to introduce elastin to the second largest precision dispensed market globally. Turning to therapeutic dermatology, Nemluvio remains on a strong trajectory, especially in the US. Nemluvio continues to surpass expectations underpinned by growing demand and increased access. This is reflected in Emluvia's growing share of total prescriptions and paid new patient starts. If we look at the six-week rolling average of paid new patient starts, also known as NBRX, from September to early October, Emluvia was trending at about 37% market share in Borrelia nodularis and 7.3% in atopic dermatitis. As a result, atopic dermatitis sales became the larger contributor in the third quarter. Overall, the majority of patients starting on Menluvio were new, yes, new to advanced therapy. This demonstrates the value perceived for Menluvio in these indications by healthcare professionals who have prescribed the product to their patients. Last, but of course not least, we continue to expand access for patients. The percentage of patients covered by commercial plans with broad access to reimbursement has surpassed 80%. For both indications, Nemluvio is reimbursed as a first-line biologic treatment with no need to first go through another therapy. Meanwhile, in international markets, Nemluvio's uptake continues to be strong in Germany. We have now launched Nemluvio in Austria, Switzerland, the United Kingdom and Denmark, while progressing on price negotiations with multiple other markets where Nemluvio is already accrued. A number of additional regulatory submissions globally are also in progress. As you can see, Galderma continues to perform strongly, advancing our growth drivers across the portfolio and reinforcing our leadership in dermatology through new data presentations and world-class education programs. I'd now like to hand over to Thomas to cover the sales performance in more detail, as well as the outlook for the remainder of the year. Thomas?

Thank you, Flemming. It's my pleasure to comment on Garderma's Q3 2025 Trading Update and Outlook, starting with an overview of net sales for the period. As mentioned by Flemming, Garderma continued on its strong momentum, achieving a record 3.737 billion U.S. dollars in net sales for the first nine months of the year, up 15% year-on-year at constant currency. For the third quarter, this represented an acceleration to 21% year-on-year growth at constant currency. This was higher than expected for the quarter, based on strong performance across the portfolio, and especially from Nemnubio's ramp-up, along with some favorable phasing in Euro modulators. Growth was broad-based and continues to be driven by volume, complemented by favorable mix, which more than offset adverse price impacts. Looking now at injectable aesthetics, net sales were 1.871 billion U.S. dollars, up 10.5% year-on-year at constant currency. Neuromodulated net sales were 1.053 billion U.S. dollars, up 14.0% year-on-year at constant currency. Both the U.S. and international markets delivered double-digit growth, outperforming the markets and gaining shares. Growth was driven by strong performance of Gizport in both the U.S. and international markets, along with the ongoing ramp-up of Relfides. Newer modulator growth in the third quarter was 12.6% in constant currency, ahead of expectations, benefiting from strong execution, as well as some favorable phasing between the third and support quarters. Fillers and buy simulators net sales were $818 million, up 6.2% at constant currency for the first nine months. Again, Galderma grew faster than the market and gained share in both the US and international markets. While fillers overall continue to be impacted by market softness, Galderma's performance was supported by the growth of differentiated products and especially new launches, including Rest in Shape in Brazil, as Clemming presented earlier. Biostimulators maintained very strong momentum with outstanding double-digit growth in both geographies. Sculptor remains our fastest growing injectable aesthetics brand. Growth was especially high in international markets with widespread performance and strong contribution from China, where we just launched the brand earlier this year. Next. Moving to dermatological skincare. Net sales for the first nine months were $1.063 billion, with a year-on-year growth of 8.2% at country currency. Calderma outgrew the market in dermatological skincare globally, with the majority of our key market gaining share, despite some constrained consumer spending. Growth in dermatological skincare was led by international markets, our larger geography, where both Cetaphil and Elastin grew double digits. I would also be remiss not to mention Cetaphil's continued outstanding trajectory in fast-growing Asian markets, especially in India and China. In the U.S., performance was impacted by constrained consumer spending. Nonetheless, Cetaphil in the U.S. saw positive responses late in the third quarter from multiple promotional activities. Meanwhile, Elastin continued to deliver double-digit growth in the U.S. Now, on to therapeutic dermatology. Net sales reached 804 million U.S. dollars for the first nine months of 2025, up 40.4% year-on-year in constant currency. Growth was driven by NEMluvio's continued outperformance, which more than offset the expected decline in the mature portfolio. Nenuvio's net sales for the first nine months were $263 million, predominantly from the U.S. and ProRigo Nodularis. However, the topic dermatitis representing the larger market opportunity overtook ProRigo Nodularis sales in the third quarter for the first time. As formulary coverage for patient reimbursement increased significantly, the results for the third quarter reflect managed care rebates resulting from securing commercial coverage. For the mature portfolio, excluding Hemluvio, performance was impacted by anticipated lower volumes and pricing pressures globally, especially in the U.S. Nonetheless, we also saw some positive momentum in international markets, where we capitalized on our strong portfolio in Acne and Rosacea. Now, looking at net sales geographically for the first nine months of the year. The majority of our top 10 markets grew double digits, with particularly high performance in key international markets, such as India, China, Mexico, Germany, and the UK and Ireland. Both reporting geographies accelerated their growth momentum, noting the US growth was especially fueled by the Nimluvio ramp-up. International, which remains the larger of our two reporting geographies, continued its strong growth momentum with 13.2% net sales growth at constant currency. Injectable aesthetics delivered double-digit growth in most key international markets, including in Europe, Latin America, and Asia Pacific. Both neuromodulators and phylogenetic simulators grew double-digit, outpacing the market and gaining share. Neuromodulators saw growth across markets. Fleming already shared some highlights for Europe, which delivered the greatest growth contribution supported by the launch of REL FIDES. Growth for neuromodulators in the third quarter also benefited, as mentioned, by some favorable phasing relative to the fourth quarter. For fillers and biosimulators, Restylane Gage gained share in most key markets against a soft backdrop for fillers. As for Sculptra, we delivered strong growth and outstanding performance across international markets with some markets growing even triple digits. This includes markets where Sculptra is already well established, especially in Latin America. Following the launch earlier this year, Sculptra continues its strong ramp up in China, the second largest injectable aesthetic market globally. Dermatological skincare also delivered double digit growth internationally. ahead of the market, driven especially by continued outstanding growth of Cetaphil in Asia, especially in China and India. Alactin also contributed to strong growth from the ongoing international expansion, albeit from a smaller base. Therapeutic dermatology growth was primarily driven by the ongoing rollout of Nemluvio also internationally. Moving now to the U.S. Net sales growth was 17.5% year-on-year at constant currency. The growth contribution was particularly strong from the ramp-up of Nemluvio while injectable aesthetics and dermatological skincare grew modestly. Both neuromodulators and psilocybin virus stimulators outperformed the U.S. market and gained share. Growth was especially driven by Dysport and Sculptra, both growing double-digit, while Restylane outperformed a declining filler market. This sport in the U.S. also benefited from some favorable phasing between the third and fourth quarter. In dermatological skincare, we navigated a constrained consumer spending environment in the U.S., especially impacting C. difficile. Nevertheless, C. difficile in the U.S. saw positive responses late in the third quarter from the multiple... Now moving on to tariff exposure in terms of the U.S., our exposure to tariffs that are already in effect is deemed manageable. Tariffs are mainly relevant for our U.S. fillers and biostimulator portfolio, which represents approximately 7% of our total Galderma net sales. Please recall that any tariff would be on the import value, thus exposing only a portion of the in-market net sales price to tariffs. Furthermore, it is important to remember that our in-market net sales price charged to healthcare professionals is typically only the smaller portion of the end consumer treatment price. Also recall, more than 90% of all injectable aesthetics products currently sold in the US are being imported. Our guidance fully factors in the exposure to all tariffs that are already in effect. Any further tariff announcements will be reviewed as to their potential impact during the remainder of the year if any. Given the importance of the US market, let me also remind you that we continue to expand our US operations. Earlier this year, we announced our new US headquarters in Miami, Florida, complementing our already established corporate and R&D hubs in three other US states. We continue to provide significant healthcare professional education and training events across the country. We have committed to spend more than 650 million U.S. dollars on U.S. manufacturing activities through third-party manufacturers over the next five years. This includes ramping up final assembly and packaging for Nemluvio in Florida, as well as the manufacturing of elastin and select Cetaphil products with our contract manufacturing partners. Also, Galderma and its partners have initiated additional technology transfers to the U.S., focusing on key growth drivers, including double-sourcing Relfides in the U.S. Now, on to guidance. We are raising our guidance for the full year, as Flemming already mentioned. This reflects our strong growth trajectory across the portfolio and especially of Nemluvio. We are raising net sales to 17.0% to 17%. 0.7% year-on-year growth at constant currency from previously 12% to 14%. On core EBITDA, we are raising the margin range to 23.1% to 23.6% at constant currency from previously approximately 23%. The guidance update especially reflects the significant ramp-up of Nimluvio, which is driving growth in therapeutic dermatology. It also reflects the strong trajectory in injectable aesthetics, with continued outperformance of the market in both neuromodulators and fillers and biosimulators. In neuromodulators, the fourth quarter is expected to be impacted by phasing effects. Full year net sales growth for neuromodulators is expected in the low teens constant currency. At the half year call, I translated low teens as 11 to 13%, as you recall. As we have now delivered a strong third quarter growth rate, our full year performance is largely de-risked, and we expect growth towards the upper end of this 11 to 13% growth range. In fillers and biosimulators, expectations for the fourth quarter are to maintain the recent growth momentum based on the strong trajectory of Sculptra and from new launches. Dermatological skincare is expected to accelerate its growth momentum to reach high single digit growth at constant currency for the full year. And finally, for the therapeutic dermatology mature portfolio, the Q3 year to date performance is indicative of our expected full year growth for this part of the business. The updated core EBITDA margin reflects reinvestment into growth for the group and to support Nemluvio's strong ramp-up. It also factors in the exposure to all US tariffs that are currently in effect. Any further tariff announcements will be reviewed as to their potential impact during the remainder of the year. Please note that the updated guidance also has implications on the additional modeling metrics which were previously provided in the financial results. In particular, The increased profitability is expected to positively impact the effective tax rate for the full year, putting it towards the lower end of the previously provided 23% to 25% range that we provided at the half-year call. This concludes the introductory remarks of Galderma's trading update for the third quarter of 2025. Before we close the meeting with Fleming's final remarks, I would like to now hand back to the operator to open the call for questions. In the interest of allowing sufficient time for all analysts to ask questions, I would kindly remind everyone to please limit your question to one each. Operator, can you please now open the line?