Galderma Group Ag

Warm welcome to the Golderma full year 24 financial results call. As customary, the press release along with the Golderma's 24 finance reports were published at 7 a.m. Central European Standard Time today and can be consulted on our corporate website at any time. Today's presentation slides as well as the 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 would be treated with appropriate level of caution as detailed on this slide. Let me now introduce today's full year financial results webcast. Dr. Flemming Ornskov, CEO of GoDerma, will provide a performance update for the full year, including commercial and innovation highlights by product category. Thomas Dietrich, CFO, will then introduce the 24 financial results and the financial outlook. 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 Galderma's highlight for 24. Flemming, over to you.

Thank you, Emil. Good morning, good afternoon, and welcome to Galderma's 2024 financial results webcast. Today, we're excited to share our record-breaking performance as we close our first year as a publicly traded company with strong progress across our product categories and future growth platforms. DELDRMA is on a strong growth trajectory for 2025 and beyond as we focus on the continued execution of our growth-focused integrated dermatology strategy. Starting with our financial results highlights, Golderma delivered a record $4.4 billion in net sales for 2024, achieving 9.3% year-on-year growth at constant currency. Performance was widespread across product categories, with injectable aesthetics and dermatological skincare delivering particularly strong performance. Our growth remained predominantly volume-based, primarily driven by international, our larger geography. Galderma also set a new profitability record in 2024 with core EBITDA exceeding $1 billion for the first time. Our core EBITDA margin was 23.4%, driven by ongoing underlying profitability improvements, excluding investments in Nemolizumab, our novel biologic and therapeutic dermatology, now branded as Nemluvio. margin expansion in the second half of the year exceeded expectations. Thomas will cover this later in the call. Looking ahead, Goderma's 2025 guidance reflects both our continued growth trajectory and the investments needed for this key year of product launches. We're guiding for net sales growth of between 10% and 12% with a core EBITDA margin of around 23%, both at constant currency. While we expect underlying profitability to rise further in 2025, driven by operating leverage, this will also be the year with the biggest adverse P&L impact from our investments in Nemo Listener. Overall, we're confident in Galderma's future and reaffirm our previously stated mid-term guidance. Beyond record financials in 2024, Galderma further solidified its leadership in dermatology. Starting with our broad and innovative portfolio, we delivered differentiated innovation throughout the year. We'll cover these more in detail later, but highlights include the first country launches of our biologic with Blockbuster Potential, Nemluvio, and Ralphie Nest, as well as the introduction of Restylane Shape, a new filler with bone-mimicking properties. We also expanded culture and elastin into new international markets and maintained a continuous flow of innovation with Cetaphil. On the scientific front, we released new data for Nimluvio in prestigious publications, including The Lancet and JAMA Dermatology. Additionally, to support the launch of Nemluvio, we conducted numerous education activities focused on the burden of itch in periglomodularis and in atopic dermatitis. We also premiered positive three-month interim data from a unique and first-of-its-kind injectable aesthetics trial for patients on rapid weight loss medication. The data demonstrates that a treatment combination of Restylane and Sculptra is effective to improve facial aesthetic appearance following medication-driven weight loss. Gilderma also released data supporting Sculptra's regenerative effect, showing how Sculptra helps restore the deep underlying structure of the skin. Now, let's turn to our global scale with omni-channel execution excellence. In 2024, we delivered double-digit growth in nine of our 10 international markets. we also significantly grew our sales force by more than 40% compared to 2023, strengthening support for Nimluvio's launch as and for our fast-growing emerging markets. In terms of skincare, we remain focused on digital-first execution, reaching billions of consumers with our campaigns and with e-commerce sales growing over 30% year-on-year. Last, but of course not least, we showed category leadership with our market-leading education and services, showcasing our innovative portfolio and strengthening our partnership with healthcare professionals. For the full year, Galderma reached over 225,000 healthcare professionals through education, training, and medical awareness activities. This included a prominent presence at key medical congresses and numerous proprietary educational events. Building us a sex of gain, which is our Galderma Aesthetic Injector Network, we launched SKIN, the Skin Knowledge and Innovation Network, spanning dermatological skin care and therapeutic dermatology. At the same time, we grew Aspire, our aesthetic loyalty program in the U.S., to 4.3 million consumers, adding over 200,000 new patients in the fourth quarter of 2024 for first-time treatments. Now, let's look at our performance update for 2024, including key achievements for the year by product category. Overall, Galderma delivered strong top-line growth for another consecutive year, achieving record $4.4 billion net sales in 2024, up 9.3% year-on-year at constant currencies. Fueled by focused execution and differentiated innovation, growth was predominantly volume-driven and complemented by positive mix. New product launches and geographic expansion remain key drivers of growth, accounting for nearly a third of growth in 2024. On the following slides, we review the results by product category, along with the significant progress made with Gilderma's BlockBlockster platform and future growth drivers. Starting with injectable aesthetics, Gilderma's largest product category, net sales for the full year were 2.3 billion U.S. dollars, with year-on-year growth of 9.6% at constant currency. Both injectable aesthetics categories, the subcategories, performed very strongly, with double-digit growth rates for this port and for sculpture. Valderma continued gaining market share with its injectable aesthetics portfolio despite intensified promotional activity across markets. In neuromodulators, globally, we continue to perform very strongly and reduce the gap with the leading player. In fillers and biostimulators, we are pleased with the acceleration we saw versus last year with significant growth and continued market share gains. The filler market saw strong performance in our international choreography, while the US is facing unique dynamics. We're noticing three trends particular to the US. First, overall filler demand and utilization has gone down. This includes from normalization following the COVID-19 boom and shifting consumer trends. Second, we see greater price sensitivity driven by increased competitive pricing, especially for less differentiated products such as mid-phase fillers. And a third, we're noticing increased direct-to-consumer engagement. In that context, we remain committed to our strategy, focused on our premium precision and integrated dermatology strategy. Globally, we're doubling down on science and healthcare professional engagement. Our focus also remains on driving growth for products where we have clear differentiation while preparing for launch for further innovations. In injectable aesthetics, overall for the fourth quarter, beyond some market software, year-on-year growth was impacted by a high comparative base. It was also affected by phasing of growth across soft categories in the second half of the year, rebalancing the sales phasing for the third quarter. With that, Let's look at some of our 2024 achievements by subcategory. Starting with newer modulators, we continue to deliver strong growth and outpace the market. With our base portfolio and flagship brand Dysport, we continue to gain market share globally, led by gains in seven of our top 10 markets. This includes continued share growth in the US and in China. In China, where we see significant untapped potential. We achieved double-digit growth in 2024, expanding distribution following our launch only a few years ago. In the U.S., despite softer consumer demand and aggressive competitive pricing, disbarred consumption remained strong, outperforming the market for both the full year and for the fourth quarter. In Europe, we became the number one player in Southern Europe, further strengthening our overall leadership in the region. And in Latin America, where we also lead in injectable aesthetics, we outperformed the market by two times. Notably in Mexico, where we were the only new modulator to achieve double-digit growth for the full year. A strong growth trajectory for Dysport. which will be further boosted by Ralphides, our next generation liquid neuromodulator. Ralphides is tracking ahead of expectation with strong first launches in Germany and in Spain. Feedback so far is very positive, especially on the fast onset with many patients reporting visible results as early as day one. The product is now approved in 14 European countries as well as in the UK and in Australia. Our teams are actually progressing on this launch rollout. For the US, as communicated previously, our teams are working towards refiling by year end. You may recall that we have received a complete response letter from the US FDA. The observations were not related to the product's efficacy or safety, but rather to chemistry, manufacturing, and control processes. This is quite standard in this subcategory, due to the very complex manufacturing processes. In parallel, as Ralph Fidesz is our first global neuromodulator, we are also looking forward to expanding into new markets such as the Middle East. At this year's NCAST World Congress, interest in our Ralph Fidesz symposium was so high that we reached maximum room capacity at 1,800 participants, forcing us to turn people away. Our fillers and biostimulators category also grew in 2024, driven by focused execution and differentiated innovations. Fillers were impacted by softness in key markets, but saw sustained growth in Asia Pacific and in Latin America. Meanwhile, biostimulators continued on their strong growth trajectory globally with notable performances in Thailand and in the Middle East. set a strong foundation for our future growth diary we leverage our leading education activities to train healthcare professionals on our new innovations this included a successful train the trainer event in brazil for wrestling shape ahead of its launch planned in the coming weeks this will be the second country to roll out this bone mimicking innovation after canada in china We organized a game training event at the end of last year, which featured Sculptra for the first time. This was a great opportunity to start building education and excitement in anticipation of its launch there later this year. Overall, we remain well-positioned to keep driving growth with differentiated innovations that have yet to be rolled out globally, including Rastelane Shake, as well as Rastelane Skin Boothers, one of our fastest-growing SKUs. For the U.S. in particular, we are gearing up for several launches next year. We also continue to invest in science and innovation to shape and to expand the category in the mid to long term. A good example is the interim trial data we published on the effectiveness of our portfolio for patients experiencing medication-driven weight loss. We are well positioned to support the need of these patients, including their primary concern of firming up their skin. We believe this dynamic will further support cattle growth over the coming years. In terms of additional longer-term innovations in both fillers and in biostimulators, we're working on new indications and formulations along with disruptive technologies. Overall, 2024 brought exciting developments in injectable aesthetics with more to come in the years ahead, fueling our strong growth momentum. Moving to dermatological skincare, net sales for 2024 were $1.3 billion, up 10.7% on a constant currency basis. Yelderma experienced strong growth with both of its flagship dermatological skincare brands, Cetaphil and Elastif. In international markets, Cetaphil continues its strong growth project with notable market share gains in Brazil, Canada, China, India, the Philippines, as well as in the UK and Ireland. Meanwhile, Elastin started to ramp out outside of the US as we continued its international expansion. In the US, CWL growth was impacted by constrained consumer demand, but still captured pockets of growth, especially in e-commerce channels. It also benefited from improved shelving with Galderma's largest retail partner. Meanwhile, Alastin continues its strong growth trajectory, benefiting from its integration into Galderma's leading dermatology platform. This slide shows the strong digital engagement of our dermatological skincare portfolio, which is key to driving growth in today's environment. It affects the ability to target younger demographics and to capture the growing e-commerce share of the market. In 2024, Galderma reached billions of consumers worldwide by engaging with leading healthcare professionals and skin influencers. In the first quarter alone, Cetaphil reached over 5 billion consumers, and we continue to expand and deepen our global and local advocacy campaigns for both Cetaphil and Elastin. Elastin also achieved over 4.4 billion impressions from activities amplifying one of their peer procedure events in November. Our e-commerce sales also continue to grow, remaining the fastest-growing channel in dermatological skincare, with especially strong momentum on Amazon globally and in key markets. The strong e-commerce performance of over 34% was broad-based, reaching a record 34% share of total dermatological skincare sales, more than triple since I joined Gilderma five years ago. Cetaphil's outstanding year in e-commerce was marked by triple digit growth across many markets, especially on Amazon. Among the standout performances, Mexico delivered an astounding 170% year-on-year growth on Amazon and was recognized as one of the platform's best vendors for 2024. Lastly, I want to highlight another milestone that demonstrates Galderma's strength of execution in e-commerce. That is another record-breaking performance for Cetaphil in China during the so-called Double 11 activation. Not only did Cetaphil grow more than 25% year-on-year for that period, but it was also the brand with the greatest online share gain among all skin care brands. Cetaphil and Elastin are both well positioned for ongoing penetration expansion as demonstrated by our 2000 performance and their remaining opportunities for growth. First, we have the opportunity to build on re-energized brands through digital first activation and our science-based portfolio. Earlier in 2024, we revealed a new brand identity for Cetaphil. We also ensured a constant and consistent flow of new launches. we drew on our deep understanding of skin to launch differentiated innovation designed for sensitive skin, particularly in the face weights. These were tailored especially to younger demographics and local consumer needs, along with the continued global expansion of relevant lines such as baby in Asia. I'm also proud to share refreshed premium branding for Elastin. Elastin is now fully integrated into Galderma's platform with new packaging optimizing for display in physicians' offices. Elastin C Radical Defense Antioxidant Serum continued its robust uptake in the U.S. In just over a year, this award-winning product has gained significant market share and is nearing the number one position in this segment. Second, with Galderma's unique dermatology platform, we leveraged our full portfolio to accelerate our growth. Starting this time with Elastin, the benefits and synergies with our leading aesthetics portfolios are paramount. In the US, Elastin continued to gain market share as the preferred peri-procedural skincare brand. In 2024, it was the fastest growing of the top five professional US skincare brands with the largest share gain for the year. In Brazil, just four months after launch, Elastin already held over 5% market share among professional brands sold in pharmacies. This is despite a different go-to-market model with no physician-to-spend market in this country. Turning to Cetaphil, sales for the eczema-restorative line were boosted in conjunction with the ramp-up of Nimluvio in the U.S. knowing that eczema patients frequently report having sensitive and dry skin, Restoraderm can be a true complement to patient's regimen. This is another great example of our integrated dermatology strategy where our sales reps can draw on Gilderma's itch heritage to engage with healthcare professionals. In summary, dermatological skin care is on a strong growth trajectory with exciting opportunities ahead of further penetration and expansion. Looking next at therapeutic dermatology, net sales for the full year was $780 million, up 6.1% year-on-year at constant currency. Growth was driven by international markets and the first sales of Nimluvio in the U.S. This growth more than offset the decline in the U.S. of our mature therapeutic dermatology portfolio, mainly from the anticipated annualized effect of Horatio's loss of exclusivity. I'm proud to report for the first time, Nemluvio sales of 23 million U.S. dollars for 2024. Sales were predominantly in periglinal lies, given that the FDA approved this indication in August and that the atopic dermatitis approval was granted in mid-December. Nemluvio is on a strong launch trajectory and sets up therapeutic dermatology for significant growth. Over the next slide, we'll look at Nemluvia's launch trajectory in more detail. This is currently ahead of expectation and well on track to our peak sales guidance of about 2 billion US dollars. We're really excited about Nemluvia's early launch trajectory in the US, in periglonal lice and in atopic dermatitis. The feedback so far is very positive. reflecting the product's ability to treat patients and significantly improve their quality of life. Looking at periculonodularis, Nemluvio has been trending at about 30% weekly market share in new patient stocks. This is based on new-to-brand prescription from January to mid-February 2025. This covers only paid prescription and does not include products which are provided by Galderma patient services to help bridge until reimbursement. Delterma has invested in growing medical awareness and education of nemluvio, and more specifically, the very high burden of itch. This has translated into a high attention and intention to prescribe among healthcare professionals, growing patient awareness, with prescribing dermatologists telling us that nemluvio is being requested by increasing numbers of patients suffering from corigula nodularis, and increasing adoption from patients who have not previously followed a biologic treatment, what we call so-called naive patients. This speaks to the fact that pericardial nodular iris remain an underdiagnosed and undertreated condition. For atopic dermatitis, the launch trajectory off to a strong start, also compared to recent entrance, building on the positive adoption in pericardial nodular iris. We're continuing the expansion of the sales force and have now onboarded new sales reps following them Louvre's approval in atopic dermatitis. We expect to be fully resourced by the end of the year. Patient feedback has been positive also in periglonolaris and now in atopic dermatitis with early interest and uptake. Patients are reporting fast onset of itch reliefs which we now know is the most burdensome symptom for patients, with some patients itch-free within days of starting pre. Convenient dosing, only every four weeks from the start with an optional maintenance dose of every eight weeks. And last, but of course not least, low to pain-free injections with our unique autoinject. We continue to make significant progress on our payer discussions and are rapidly expanding, yes, rapidly expanding market access ahead of expectation. In both curricular nodularis and in atopic dermatitis, more than 40%, yes, 40% of commercial carbon life have access today to Nemluvio as a first-line, a first-line biologic treatment. This is a major milestone at this point of our launch for gesturing. Beyond the U.S., nemluvio was also approved in the past weeks for periclonolars and for atopic dermatitis in the European Union, as well as in Switzerland and in the U.K., marking the first approvals from countries within the so-called access consortium network. Regulatory review processes are ongoing in additional key markets while we continue our filing activities globally. We're also exploring new potential indications for Nimluvio as an incremental source of growth for Galderma's therapeutic dermatology portfolio beyond the midterm horizon. We're looking to initiate new trials in 2025 with more details to be shared with you later in the year. Starting with international, Galderma's largest reporting geography internationally continued driving Galderma's growth and delivered another year of double-digit performance in highly attractive and largely underpenetrated markets. International markets saw double-digit growth across all three, yes, all three product categories for the full year, with the fourth quarter of 2024 barking the strongest growth quarter of the year. The double-digit growth in international in the fourth quarter was driven by strong year-end engagement activities across product categories. This was further boosted by a low 2023 comparative base. Key highlights for international markets include new modulators, leadership, and market share gains with particularly strong demand in Europe and Latin America, failures and biased images, robust growth overall with notable growth in Thailand and in the Middle East, broad-based CTO growth across markets with strong growth in China and in India, a lasting expansion in its first international markets, and outperformance of the mature therapeutic dermatology portfolio in international markets. In the US, we delivered flat year-on-year growth for the full year. Modest growth in injectable aesthetics, dermatological skincare, and our first sales of Nimluvia were offset by an anticipated decline in therapeutic dermatology. In injectable aesthetics, our US business continued to gain market share across its portfolio. In a softening injectable aesthetics market with intensified promotional activities, growth for the full year was driven by Dysport and by Sculptor. In dermatological skincare, the largest growth contributor in the US was the fastest growing e-commerce channel, along with improved Cetaphil execution with Galderma's largest retail partner, Walmart. It was also helped by increasing penetration of Belasting, leveraging synergies from Galderma's leading position in the injectable aesthetics market and its practices. And in therapeutic dermatology, our mature portfolio declined from lower anticipated volumes and competitive pressures. As mentioned, Nimluvio recorded its first sales and is tracking ahead of expectations. For the fourth quarter, the U.S. overall recorded a single-digit decline from the continued impact from constrained consumer spending, a high comparative base in the fourth quarter of 23, along with rebalancing of growth compared to the third quarter of 24. This was especially the case for injectable aesthetics, where Galderma nonetheless continued to gain share, and the anticipated decline of the U.S. mature therapeutic dermatology portfolio, not yet fully offset by Nemluvio sales. Overall, we're very pleased with our performance globally with strong continued momentum for international markets and with a foundation well set for ramp up growth in the US in 2025. Before passing to Thomas, I'd like to take a moment to deep dive into one of our standout international markets, India. and highlight our achievements in 2024. It was a consecutive year of robust growth with ongoing expansion in one of the fastest-growing dermatology markets. In 2024, India surpassed 100 million US dollars in the year for the first time, continuing on its double-digit growth trajectory. In dermatological skincare, Cetaphil is the number one brand and continues to gain market share, which underpins the growth of the full portfolio. Diabetic dermatology is also outpacing the market by a factor too. Yes, factor too. Meanwhile, injectable aesthetics keeps growing from a small base, expanding its footprint and reaching more and more healthcare professionals. So Derma's success in India and globally can be credited to our leading dermatology advocacy. This includes a top sales force which we continue to expand, and a strong local team which is celebrating its Great Place to Work certification for the fourth year in a row. Gilderma is also leveraging and scaling its portfolio synergies, building on Cetaphil's leadership position in India's fast-growing dermatological skincare market Some of the highlights include Cetaphil as the number one dermatological recommended brand, Cetaphil as the number one most trusted skincare brand voted by consumers for the second year in a row, and Cetaphil as the number one skincare brand across e-commerce channels. Here, there are many more achievements worth highlighting, but including being Amazon's number one bestseller in cleanser and face wash for the last two years and e-commerce growing triple, yes, triple digits. Overall, our position was supported by omnichannel excellence. Beyond the billion consumers reached, Cetaphil drove strong advocacy campaigns, collaborating with more than 500 healthcare professionals and skin influencers to educate consumers on skincare. We also went totally viral as one of the most trending topics in 2024. India is, for us, a clear growth driver for Galderma today and in the future, with pace, distribution expansion, and increasing reach among healthcare professionals. This is just one example which highlights the potential we see across international markets. In many cases, these remain totally under-penetrated, and Gilderma is well-positioned to continue driving about market growth in 2025 and beyond. With this, I now like to hand over to Thomas, who will provide more details on Gilderma's financials.

Thank you, Flemming. It's my pleasure to comment on Galderma's full-year financial results and guidance, starting with an overview of our financial scorecard. Galderma delivered record financial performance in 2024, not only on the top line as Flemming just presented, but overall, with Core EBITDA surpassing $1 billion for the first time and leverage reduced to 2.3 turns. Core EBITDA grew ahead of sales driven by ongoing strong operating leverage excluding nemolizumab, as well as lower spend on nemolizumab due to efficiencies in research and development, which we'll look into on the next slide. Here is the 2024 P&L, and let me start with the core EBITDA margin improvement for the year. Core EBITDA margin was 23.4 percent in 2024, representing an increase of 30 basis points compared to the 2023 core EBITDA margin 23.1%. At constant currency, core EBITDA margin for the year was 23.6%, up 50 basis points compared to 2023. This foreign exchange impact is due to two things. One, our exposure to the Swiss franc, mainly from our headquarter in Switzerland, and two, due to the depreciation of the Brazilian real versus the US dollar in the period. The main driver for the core EBITDA improvements continues to be our ongoing operating leverage from our highly scalable integrated dermatology platform, as we'll see on the next slide. However, core EBITDA margin also benefited from lower than anticipated R&D spend for Nemolizumab of approximately 24 million U.S. dollars, compared to the 250 million spent for the full year, which we expected at the beginning of the year. These R&D cost savings in the fourth quarter were mainly from lower than expected costs for the prurigo nodularis and atopic dermatitis pivotal study. Excluding these savings, core EBITDA margin at constant currency would have been 23.1% instead of the 23.6% I mentioned earlier. Lastly, on core EBITDA margin, the improvements of operating expenses offset the impact of pricing pressures on gross margin, which came from an increasingly competitive landscape and some softer consumer demand in the U.S. Core net income grew by 138.8%, reflecting three main drivers. One, the strong financial performance on top and bottom line. Two, significantly lower financing expenses. due to our deleveraging and refinancing activities following the capital structure reset at IPO, and three, a significant improvement of the effective tax rate. For 2024, it was 25.5%, coming down nicely towards our midterm guidance of approximately 20%. Moving on to the next slide, you can see that Garderma's underlying profitability for 2024 reached 28.5% if you exclude the $226 million of total Nemolizumab operational expenses. As you also see, our underlying profitability continues to increase year on year and also compared to the 27.7% we achieved in the first half of 2024. The improvements are driven by operating leverage from our integrated dermatology platform especially benefiting sales or marketing spend. Next, let's look at the cash generated by the group. This slide here is a simple cash bridge. It shows our cash position at the end of December and the key movement versus year end 2023 in simplified form. Gadoma grew its cash position in 2024, allowing for early debt repayment. Let me walk you through the key items on the bridge. On cash generated from operations, we've already covered Galderma's high cash generation, which you see here, driven by the core EBITDA generation. As a reminder, the $58 million of pre-IPO incentive settlement represents a one-time cash out, which was settled at IPO and which we already reported on in our first half-year financials. On interest and taxes, Interest cash out for the year was $285 million, with the second half of the year benefiting from two things. One, the reset of our capital structure post-IPO, and two, further deleveraging and refinancing, including the issuance of our inaugural Swiss bond in late August. On capex and milestones, all three milestone and earn-out payments planned for the year were paid for a total of $176 million. And finally, On financing cash flow and foreign exchange, we repaid $256 million of our gross debt in the period, which is a testament of Galderma's cash generation ability. Let me now look at Galderma's deleveraging trajectory on the next slide. As you can see here, leverage came down to 2.3 turns at the end of December 2024. from 2.6 turns at the end of June and 4.9 turns at the end of December 2023. We reduced net debt for the year by $2.3 billion. Net debt now stands at $2.4 billion. As mentioned before, this reduction was due to the reset of our capital structure at IPO and the significant cash generation during the year. We achieved this despite major cash outs following the final Alastin earn-out payment of $50 million and the second-to-last milestone payment for Nemluvio of $126 million. The early repayment of $256 million of our gross debt was clearly the right thing to do given our strong financial results for the year. And finally, I'm very pleased to announce that Calderma received investment-grade rating from the rating agency Fitch this morning of triple B stable, reflecting our good financial health, responsible financial policy, and very robust business performance and outlook. Moving on to capital allocation. We made significant progress also here, in line with our previously communicated priorities, which remain unchanged. In 2024, we continued our strong sales growth trajectory, supported by investment in our organic business. We delivered on our deleveraging commitment, as mentioned earlier, with leverage at the end of 24 at 2.3 turns, supported by the strong cash generation. Regarding business development and licensing, the memorandum of understanding we signed with L'Oréal to work towards a new research and development collaboration has the opportunity to expand Galderma's innovation horizon via complementary R&D projects. We expect to be able to share an update in 2025 as discussions are progressing well. Last but not least, the Board will be proposing for approval at our upcoming AGM an inaugural dividend of 0.15 Swiss francs per share. The dividend payout represents approximately 17% of our 2024 reported net income to be paid in 2025 and, of course, subject to AGM approval. Moving on to our guidance for 2025. For net sales, we expect growth of 10% to 12% at constant currency. This represents an acceleration of Galderma's growth trajectory, fueled by the continued execution of our growth focus, integrated dermatology strategy, and two exciting launches, Nimluvio and Relcadet. For core EBITDA, we expect an overall group margin of approximately 23% at constant currency. This is the result of two drivers. One, our underlying profitability, to continue to increase also in 2025 as it has done in the previous year, as I have just shown before. And two, as you may recall from our past comments, we also expect in 2025 to see the highest adverse P&L impact from our investments in emolizumab. And that is why we expect the core EBITDA margin for the group overall to stay broadly in line where it has been for the past two years. More details to come on this in a moment. Our core EBITDA margin guidance also factors in the current and quite volatile global trading environment, including the ongoing implementation of tariffs in the US to which we have manageable exposure. We are very closely monitoring and managing the implications for our business on a day-to-day basis. While we are working through various short-term and very targeted mitigating actions, including possibly raising prices, if and where it makes business sense, we are also assessing longer-term options, including for our manufacturing footprint. Overall, Galderma is poised to continue its strong growth trajectory in 2025 and beyond, as we'll see in a few moments, when we will reconfirm our previously stated midterm guidance. On this slide, still focusing on 2025, on this one and on the next one, let me discuss the phasing of the top and bottom line for 2025. As you can see here, net sales growth in percent for the first quarter is expected to be subdued and to significantly accelerate thereafter. The black line here shows the community's year-on-year growth of net sales at constant currency reaching 10% to 12% for the full year. The bars represent the quarterly net sales in absolute dollars, which are following our typical seasonality pattern, and where you can also see that quarterly sales volumes are expected to remain strong throughout the year. However, year-on-year sales growth in percent in the first quarter of 2025 is expected to be clearly subdued compared to our full year guidance range due to a high comparable base in the first quarter of 2024, with especially strong growth in injectable aesthetics across all geographies. Then, ongoing market softness, especially in fillers in some markets, and the impact from the recent wildfires in Southern California, which we believe will be temporary. So, what are then the drivers of sales growth acceleration throughout 2025? We see three buckets of very exciting catalysts. One, the launch of disruptive innovation, namely Nemluvia and Relfidev. where Nemlouvel is off to a strong start in the US. There are additional launches in international markets planned for this year following the recent approvals, such as the launch already underway in Germany. Relfides started really strong as well in its first launch markets, namely in Germany and Spain at the end of last year. There are multiple additional launches upcoming this year, such as in France and Australia, with first sales already recorded in 2025. There will also be exciting science-driven innovation in our dermatological skincare portfolio to look forward to. Two, further geographic and portfolio expansion in international markets will remain a strong growth driver for us, with focused execution and investments behind these various opportunities. These include bringing existing innovation to new markets, such as the planned launches of Sculptra and Elastin in China, as well as the launch of restylane shape in Brazil and further penetration of fast-growing markets more broadly, such as in India, Fleming just covered, and China, where we still have many big cities yet to enter or to further penetrate. And three, the progressive ramp-up of year-on-year growth rates in the U.S. every quarter during 2025, including in injectable aesthetics. Overall for the U.S., This reflects market share gains, somewhat stable market fundamentals, and Nemluvio clearly being off to a very strong start. Therefore, we expect a strong sales trajectory for the group in 2025. Now, moving on to the phasing of core EBITDA for 2025. On this slide, the bars represent the core EBITDA dollars, while the black line represents the core EBITDA margin percentage at constant currency for the period. We are very excited about Nemluvio and continue to invest behind its strong launch trajectory. Therefore, we expect the majority, call it two-thirds, of the adverse P&L impact from our Nemluvio Nemolizumab investment to occur in the first half of the year. And for the second half of the year, core EBITDA margin is expected to significantly accelerate as the adverse impact from Nemolizumab OPEX investment likely decreases and as Nemluvio's sales trajectory rapidly increases. Of course, we also expect our underlying profitability to continue to improve also in 2025, as I stated before. And now let's look beyond 2025 at our midterm guidance. As a reminder, next sales growth for 2023 2027 is a constant currency, and teens are defined as numbers greater than 10 and lower than 20. On the sales growth, we continue to expect for the group low to mid-teens CAGR, injectable aesthetics also low to mid-teens CAGR, dermatological skin care high single digit to low teens CAGR, and for therapeutic derm, which includes nemluvio, a high teens CAGR. For core EBITDA margin, including nemolizumab, we expect 300 to 500 basis point improvement compared to 2023, the majority of which to be delivered in 26 and 27. And for Nemluvio, we continue to expect to reach above $2 billion in peak sales, which would naturally occur beyond the midterm guidance period. This concludes the introductory remarks of Galderma's full-year financial results presentation. 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. And as a reminder, can everyone please limit themselves to one question if possible? Operator, can you please open the line?

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 one and one again. Please turn back where we compile the Q&A. We will now take the first question from the line of James Gordon from JP Morgan. Please go ahead.

Hello, James Gordon, JP Morgan. Thanks for taking the question. If it's one question, I'll say injectable aesthetics in 2025 performance versus the medium-term guide. So I know that the guidance is low to mid-teens from 23 to 27, and you did about 10% in 23 and 24. So how should we think about it for 25? Is it going to be a year where there could be some acceleration because you've got like the Roflides launch in Europe and Sculpture in China? Or could you actually be a bit below the medium-term guide? Because there was also some comments about the market being a bit soft. I know you've taken share, but if the market's tough, because if I look at the full-year guide for the group, which is 10% to 12%, if you only did 10% for the group, And considering what Nemludia is going to contribute, that would maybe suggest that injectable aesthetics could be high single digit. So how should we think about that, please?

Thanks so much. Yeah, I think in the aesthetics space, we expect to continue to see very strong international growth. We've seen that. We are penetrating further with our neuromodulator basis. And we're also with sculpture clearly seeing we're entering into new markets. We see the impact of the medication driven weight loss. So I think there's a number of positives. The U.S., I think, yet to be seen. Early signs from the beginning of the year are positive. But as Thomas said, we probably will see more ramp throughout the year. And the initially probably will be driven with very strong performance internationally. And then as the year takes on, we expect the U.S. to show more and more growth. But the initial things we're seeing is very positive. Thomas, anything you want to add?

No, exactly. Also just underlying that in the U.S., James, you may have looked at the Q4 numbers overall and may have thought, hmm, where does this go? But also clearly in the U.S., will expect acceleration in aesthetics as the quarters progress in year-on-year growth rate. So it's really a momentum. And then as you rightfully said, Flemming highlighted, international is a real driver for growth with us. I mean, just pointing to Wellfit as again, and then also the medication-driven weight loss plus launching Sculptra in a little country called China. So that's, yeah, that'll be the key drivers.

Thank you.

Thank you. We will now take the next question. From the line of Joe Walton from UBS, please go ahead.

Thank you. If I could just clarify first something I think you said, Flemming, about the timing of the refiling for Relfordis in the U.S. I thought you said by the end of the year. Is that by the end of this year? So the launch might not be in 2026, but might even be in 2027? But my main question is to go back and look again, I'm afraid, a little bit more detail at the U.S. situation. So you've talked about demand for weight loss driven filler growth, but that doesn't seem to have happened in the U.S. I would have thought the U.S. would have been one of the major markets for this because overall fillers seem to be, I don't know if it's a secular decline because, you know, influencers are going filler free or something like that. I wonder if you could tell us a little bit more about that and if you could also tell us what you think the impact of a big player such as AbbVie doubling down or increasing their incentives will be. Will that be something that will bring everybody back to the market or something that will help AbbVie regain market share and might be tough for you? Thank you.

So, yeah, there's multiple questions. So let me talk about Ralph Fidesz, US first. Yeah, what we said is, of course, when you talk about year and you're talking about 2024 results, it's a little bit unclear what you're talking about. But the plan is to, during 2025, to work with the FDA. And if all goes well, we've had interactions with them. We plan to refile in the later part of the year. We've had, I would say, very good progress on most of the topics. There's one topic which we are working a little bit extra on, but of the many topics that the FDA raised, we feel we have, at least in our opinion and also with the interactions with experts and FDA, we have most of it under control. There's one topic where we need to still show some improved results. And then we plan to refile to what is a filing of a complete response letter by the end of the year is a six-month review time. Also remember that US is the outlier. The file is approved in all the other countries based on cell-based assays. Whereas in the US, they are still at least initially based on LD50, which has its own complications. In terms of the US market, yeah. You get mixed signals. You can say Q4 was a bit soft. But then when we look at our cell-in data to our distributor for the neuromodulator, we see good cell-in. So neuromodulator seems to be kind of the foundational therapy for patients. There has been some ongoing softness on fillers, but if I look over the year and compared to last year, it's picked up again. We're in positive territory with plus 7% overall, whereas last year was 2023, it was a negative. So I see some stabilization, but there's also more price competition, new entrants, as you know. And again here, I think we probably have to rely a bit more on international than the U.S. in the growth because we see much stronger growth there. Sculptor is a global growth driver. And of course, with China also coming online, we expect that also to add to the overall growth of Sculptor. If I look at some of the new markets like Thailand, where we launched record market share, record launches. So I'm very optimistic about this. Overall, we may have to shift some resources between US and international. It's all about growth. And if we get more from some other geographies, we'll push it there. I don't see it as something that we have to achieve a certain number in the US and a certain number outside. I'm not going to comment on a competitor. A few years ago, every call was about revents. Now it's about the whatever it is, management change that is happening at AppV. They've lost most of their senior management. I wish everybody comes back strong because it drives growth in the market, but it's way too early to comment on. But so far, I look at our market share data and we closed the gap to AppV. We're the leading in Latin America. We're the leading in Europe. We also became the leading in Southern Europe. So I think we're in a pretty good competitive situation.

Thank you. Thank you. We will now take the next question from the line of Benjamin Jackson from Jefferies. Please go ahead.

Thank you for the question. So just specifically on Memlubio, especially with the ongoing US launch, are you able to talk to how competitive those discussions were with regards to securing access, trying to understand here to what we should be expecting that price to evolve as we begin to get it covered commercially and as we roll out this year. And then on a similar line, also in Europe, how that securing of reimbursements going, price setting and progress made and initial feedback around the European early days as well. That'd be fantastic. Thank you.

Thanks a lot, Benjamin. Yeah, so in the U.S., you know, I'm really proud of the team. To have 40% of corporate lives, both in PN and AD, when we launched in August in PN and we just launched in AD. One interesting aspect is both in Medicare, commercial and full Medicare, but also in all the commercial plans, we actually have inbound calls because we have had so many successful exemptions going through. um at full price so of course the payers are interested in closing deals with us so we're closing deals much faster than we had anticipated we're currently in negotiation with some additional big ones so i feel really good about the access trajectory i think that what we see and what i also gave a little bit in the doctors that get experience with the product particularly the ones that have in pn are extremely positive about it and then also use it in in AD. What we're also surprised about is the number of so-called biologics naive patients that we're getting, so people that have only been on steroids before that are now coming into biologics. We consistently hear the same two or three things, the very fast onset of itch relief, sleep improvement, the very convenient dosing, and the incredible convenient auto-injector. And I'm sure you've seen some of the You can say they're small sample size, but some of your colleagues have done a number of surveys of dermatologists in the US, and we're in the 40 to 60%, either in AD or PN, a little bit more in PN than in AD, of physicians that either have experience or want to experience it. So I feel really positive about the outlook. In Europe, as you know, it's a different system. In some countries, you can launch and wait for reimbursement. In others, you first have to get reimbursement and then launch. What I can say is that we have the same positive feedback from physicians and we have the same pull from patients. So we will see. But of course, we're much further along. One thing that's quite interesting, when people do, and I saw a lot of people doing you know, label comparison. So there were some people in AD that said, I'm not sure how much it really clears the skin in AD. And what we're hearing is consistently my personal experience as a physician is much better than what I've seen. So we're driven off the personal experience and it's very, very, very, very positive. And it's also why I accelerated the decision on pulling more sales reps into the US.

Thank you.

Thank you. We will now take the next question from the line of Chris Shibutani from Goldman Sachs. Please go ahead.

Thank you very much. Good morning. I wanted to ask you to address the topic of tariffs. You have a truly global business and a diverse portfolio. Certainly, the U.S. market is material, but you've emphasized the international opportunity and growth. I wanted to ask as well, because Thomas mentioned about You're contemplating thinking about making adjustments to your manufacturing footprint. And I realize that sourcing of raw materials, packaging, manufacturing, there are many dimensions there. Can you comment on your thoughts and how you're factoring this into your 25 and midterm guidance and any things that you think specifically that your business may be able to do to help mitigate some of these risks? Thank you.

No, we clearly understand the governmental call of more manufacturing in the U.S. and we clearly will try to adapt to this situation. Nemluvio, a part of the manufacturing process is in the U.S. per design. So that's good. Alastin is fully U.S. Cetaphil is Canada. we will have to import it. Remember, the tariffs are on the transfer price, not on the final price. And there, we are also looking and talking to vendors that maybe could do part of it or all of it in the US. But we also need to keep in mind that even with the tariffs on top of that, we have a very efficient manufacturing line in Canada. So it's not just a shift and a and then have higher COCs. So I feel, you know, we'll see how it all ends up. I see there's movements daily almost, but we'll see how it all ends up. For the aesthetics space, it's going to be interesting because they're almost all aesthetics players outside the US with their manufacturing footprint. So we'll see how that is. Of course, tariffs are being slapped there on multiple european countries it could lead to um ultimate price increases for the aesthetics consumer but then it would be for all of them because uh it is basically what you see so i think we're we're pretty sanguine about the whole thing um i think it's also encouraging that we have very very strong international footprint and i'm very encouraged by the fact that we continue to show volume growth and share gain in the us so maybe we have to even accelerate that in a situation like

And Chris, if I could just add, I mean, Flemming summarized it really, really well. If I just add to my comments earlier that all of this we have looked at in great detail and we're looking at it also on a daily basis. And we came to the conclusion that we can factor that impact into our guidance. And so that's inside what we told you.

Thank you. Thank you. As a reminder, if you wish to ask a question, Please press star 1 and 1 on your telephone. We will now take the next question from the line of Thibault Boudarin from Morgan Stanley. Please go ahead.

Yes, thank you. First question is just, could you provide an update on your expectations for Nemluvio operating costs and breakeven? The launch was maybe a bit stronger than what we expected. The operating costs were a little bit lower in 24. At the same time, you're talking about starting new clinical studies. So just if you still think the break-even in 27 or could it come a bit earlier? And second question is just on M&A. We are seeing the leverage coming down. We are getting close to the point where you could deploy capital again in business development. So just if you could remind us of your priorities between the businesses. Is it buying brands in derma skincare? Is it buying new tech or new products? product platform in aesthetics, or could it be pharmaceutical licensing of new pipeline assets? Thank you.

Maybe I can take the M&A question and then we'll ask Thomas to answer. You can imagine with our leadership position in dermatology, we get many inbound calls. We've listened to people, we've looked at opportunities so far. But given that we have Ralphie Des and Nemluvio to launch, and you were also talking about the impact on the P&L, of course, if there's great tuck-ins, ideally smaller than larger, we would, of course, take a serious look. Yeah, you know, dermatologist skincare, you know, we saw how well we've done with the last and fully integrated, incredibly strong growth. So I think we've shown we can do that and now rolling it out internationally. So, So and it's a very attractive part to be in. But I would say we keep an open mind. But currently, really, we're extremely focused on Nimluvio launch. I know you look at the data. I heard you said it was a little bit better. We think it's dramatically better than we at least ourselves expected. We're a small player. We're up against some really big companies and to achieve these kind of sales and these kind of market share in such a very short period of time. And I've been in many launches in my career with some very big companies. the pharmaceutical sector i cannot remember having seen similar data for a fifth or a second entry in pn or fifth entrant in ad so i feel very good about that and we are only touching the surface as i see it because we only have started in the us all the financials we presented have all of the costs into them so we have no additional cost and the r d budget would also as it's been in a budget has some of these additional early-stage, mid-stage trials that we're thinking about. It's not a lot, it's a few. So all of this is already figured into the guidance, the financials, the budgets we've made for this year. Thomas, anything to add?

Yeah, just thank you, Flemming and Thibault, to your other point on the operating costs and break-even. You said correctly that we expect to break, for nebulizumab to break even sometime during 2027. That's also the year, if I can remind you, which we said during that year we expect to reach a billion dollar sales run rate and we stick to both statements um to your point could this be a month earlier a month later i mean that's almost speculative from this time into 2027 but we're we're excited we're on a really good track we see um the investments we make pay clearly off we get great access um we get great penetration um it's ramping up fine fleming mentions that's why We decided to increase the sales force in the US. I mean, we are really maximizing the uptake. And the break-even statement would stay the same as we had before. But it's a fantastic molecule with a lot of legs. Thank you.

Thank you. Unless another analyst joins the queue, this will be the last question from the line of Alistair Campbell. Please go ahead from RBC.

Thanks very much for taking the question. Look, I know it's a number you don't disclose, but just to really get a sense of the mixed effect in fillers and biostimulators. You know, broadly, biostimulators, broadly what percentage of sales does that represent to that subunit? And Do we get to the stage actually where the growth from sculpture can significantly outweigh some of the headwinds you might be seeing in wrestling? Thank you.

No, I think the category for fillers globally is of course significantly larger than sculpture, but sculpture is picking up really fast. We don't disclose whatever it is, but we still feel that there's a lot of opportunity in the filler. We see very strong growth outside the US. You have to work a little bit harder on selling fillers now because Some fillers mid-phase and other are a bit commoditized, but we have very differentiated fillers like Restylane Kiss, Lift, now Shape. So what we are doing is we think there's still a lot of opportunity in that category. The biostimulatory products are coming from a lower base, but is really rapidly expanding and we're getting into more and more countries and the US we see very good growth as well.

Thank you, Flemming. Thank you, Thomas, for the prepared remarks and the Q&A session. Thank you, everybody, for the thoughtful questions. I will hand over to Flemming as he is going to close the call with his final remarks.

Well, thank you, all of you, for really thoughtful questions. I think overall that DERMA delivered another consecutive year with strong growth momentum across its product categories and making progress across the three pillars of our integrated DERM strategy. driven by mainly volume growth in international markets and resilient U.S. performance. 24 had record net sales of 4.4 billion U.S. dollars for the full year, and that was a 9.3% growth in constant currency. Another record was Galderma's core EBITDA, where we surpassed 1 billion U.S. dollar for the first time, and we were growing ahead of sales with 12.9% growth, also a constant currency. Core EBITDA margin was 23.4%, and as you heard, significant ongoing operating leverage and expansion in the second half of the year supported by lower than anticipated R&D spend. We also progressed well on our deleveraging path, I think with debt repayment based on the confidence and our cash generation ability and leverage was, I think, very impressively given that we started very high when I started in 2019, now to be at 2.3, feels really impressive. Not too long ago, we were at 3.9, so it's going in very fast in the right direction, which we are very, very pleased about, also showing great discipline on the part of the team. And then we continue to execute on a growth-focused strategy. And I think our Neumolism app launch and our launch of Ralphie Des shows that we're also good at that. And these are disruptive in both their categories. And we're absolutely sure that, along with the rest of the business and the existing products, will drive growth both for 25 and, as you heard, we reconfirmed the midterm guidance So with that, thank you so much for joining the call today. Have a great rest of the day.