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Hello, everyone, and welcome to the Grifols Third Quarter 2023 Conference Call. Thank you very much for taking the time to join us today. This is Nuria Pascual, Investor Relations and Sustainability Officer. I'm joined by Thomas Glassman, our Executive Chairman and CEO, Victor Grifols-Deu, Chief Operating Officer, and Alfredo Arroyo, CFO. This call will last about 60 minutes. There will be a presentation of approximately 30 minutes, followed by a Q&A session. So if you want to raise a question, press the star followed by five when the Q&A session begins, and we will kindly ask you to limit your questions to a maximum of two. As a reminder, this call is being recorded, and the materials for the call are on the investor relations website at griffols.com. The transcript and webcast replay of the call will also be available on the investor relations website within 24 hours after the end of the conference call. Now, if we turn to slide two. Before we start, I would like to draw your attention to the forward-looking statements disclaimer in this slide deck of the release. Forward-looking statements on the call are subject to substantial risk and uncertainties. Speak only as of the call's original date, and we undertake no obligation to update or revise any of the statements. Now, I would like to turn the call over to Thomas Glassman.

Thank you, Nuria. Good afternoon and morning to all on the call. Thank you for joining us today. As you can see from our press release issued this morning, we have reported another strong quarter, further accelerating growth, improving our EBITDA, and meeting our commitments. But before we go into our operational performance, I want to address upfront what is and has been the market's concern about our deleveraging progress. Our commitment to deliver a material deleveraging transaction in 2023 of at least $1.5 billion in cash has not changed, nor has our very focused efforts to reach a leverage ratio of four times by 2024. We continue to give full priority to this. Regarding the June announced transaction in China, we are progressing and working diligently towards getting the agreement signed and expect to announce it before year-end 2023 in line with our commitment. As we are dealing with a very highly regulated environment, we expect to get all approvals and closing the transaction during the first half of 2024. Ultimately, this will support the organic results we are currently already delivering to continue deleveraging the company. Let me now walk you through how we are meeting our other commitments. Q3 was another quarter of strong revenue growth where we also delivered a 25.1% adjusted EBTA margin which is a significant improvement of 480 basis points compared to Q4 22 margin. The revenue growth was primarily driven by biopharma and our flagship franchises immunoglobulin and albumin, and we expect that momentum to continue throughout the year. All the measures to achieve the Euro 450 million cash cost savings from our operational improvement plan have been successfully executed. We are already seeing and will continue to see the related margin expansion throughout Q4 and next year. This is particularly visible in plasma, with cost per liter further declining, while our plasma supply levels continue to grow at a double-digit pace. As a result, we are now committing to the top of our adjusted EBITDA guidance to deliver Euro 1.450 million for the full year 2023. Annualizing the Operational Improvement Plan's total savings, our adjusted EBTA margin is anticipated to increase to 28 to 29 percent, which is in line with 2019 EBTA margins. Our EBTA and cash flow improvement are significantly contributing in our organic deleveraging progress, with our leverage ratio now at 6.7 versus a peak of nine times last year. As mentioned, and I strongly reiterate, we will continue to lower this ratio and are very focused on meeting our four-time target, including signing one deleveraging transaction this year. And last, but maybe most importantly, we are now stepping up our focus on our growth strategy to ensure the creation of sustainable long-term shareholder value. We are actively accelerating a series of strategic levers to strengthen our industry leadership as a global market maker, of which our recent Egypt and Canada projects are strong examples. We have also taken steps to further strengthen the leadership team to drive innovation and digitalization at Griffles by appointing Jörg Schuttrumpf as our Chief Scientific Innovation Officer and Miguel Luzon as our Chief Digital Information Officer. Both bring a wealth of experience and have a clear compass to take Griffles to the next level. We clearly continue to see innovation as a critical, strategic value-creating lever for future growth and are therefore working towards accelerating our pipeline. A testament thereof is that all our milestones set for the second half of the year are on track, and having completed the biotest fibrinogen trial in Q3, we are confident that we will also there be able to provide top-line results soon. Needless to say, we continue to be very optimistic and excited about both fibrinogen and trimodulin and the great opportunity they represent for griffles in the future. Having delivered on all our priorities and with our fundamentals strong, we are now well on the way to truly reposition griffles for sustainable, profitable future growth. This is a new chapter for Grifols, and we are very excited to embark on it. With that, I will now hand over to Victor to take you through the details of our business unit's performance in the quarter.

Thank you so much. Good afternoon or good morning, everyone, and thank you for joining us today. Now turning to slide six, our revenue growth. throughout the previous quarters has been remarkable. As we have been mentioning consistently, the sequential progression remains exceptionally strong and positive. Grifols standalone delivered a 9.1% growth in Q1, followed by a 6.5% in Q2, and a 9.6% in Q3, all of them at constant currency. All in all, revenues grew significantly 8.4% for the first nine months of the year. For these first nine months of 2023, we achieved revenues of more than 4.8 billion, up by 11.7% at constant currency. This was primarily driven by performance of biopharma in our key proteins, as well as biotest contribution. Please bear in mind that we are consolidating nine months of biotest in 2023, while only five months in 2022. Now, turning to slide seven, our biopharma performance was remarkable, driven by growth in our immune global in flagship product, which further accelerated in Q3, with 17.4% sales growth in the quarter and close to 15% year-to-date at constant currency, as well as our album franchise. IG continues to be driven by a strong and underlying volume demand and favorable pricing, especially outside U.S. Our subcutaneous immunoglobulin in Chemify continues to see a strong volume up peak, especially in Q3, backed by higher demand in the U.S. Chemify continues to offer a vast commercial opportunity, and we plan to further capitalize on this growth with launches in some European countries and Australia starting in this Q4 2023. Grifo's strategy to continue strengthening its immune global franchise in the U.S. and other selected countries is robust. We are focused on the immune deficiency market, including the highest growth primary and secondary indications, while remaining leadership in neurology and acute care. Earlier this week, we received FDA approval for a new IG purification facility, which will increase Grifos Gammonix's total capacity to 60 million grams per year. This approval was not only obtained in record time, but it will enhance efficiencies in terms of yield, recovery, and cost per gram. In albumin, we achieved a strong revenue growth year-to-date, delivering close to 18% increase with a higher demand in China and solid price increases in some key markets. Alpha-1 and specialty protein segment revenue was relatively flat, mainly driven by lower demand of plasma-derived factor VIII and, to a lesser extent, lower alpha-1 volumes due to industry dynamics in some European countries. As Alpha-1 demand improves on the back of the solid underlying improvements in our successful commercial model, the current lower growth is expected to be temporary. At the same time, I would like to highlight in this segment the good performance of our most recently launched products, such as Tavales, Fibrin Xilin, and Thrombin. which are growing significantly. In addition, hypers and antithrombin 3 are also delivering a positive evolution. Now turning to slide number eight. As a result of the successful execution of our operational improvement plan, cost per liter continue to reduce this quarter, declining by 22% as of September 2023 versus its July 2022 peak. This has been driven by decreasing donor commitment compensation, plasma center network and staff rationalization, and reduction of other plasma related costs such as overheads. After a stabilization of donor compensation in Q2, it continued to decline slightly in Q3. Going forward, we are targeting additional operational efficiencies through process optimization, streamlined operations, and overheads, lean processes, and digitalization. Plasma supply growth remains solid at 10% year-to-date versus last year. This plasma supply growth positions the company to continue meeting the growing underlying demand for our products. In parallel, and since the beginning of the year, our R&D, manufacturing, and quality teams have been working on a project to significantly improve our yield in gamma globulins. So far, we have seen very good results in pilot-scale production, and we are beginning to implement it in full-scale production as we speak. In our next quarterly call, we hope to be able to provide more details of this project and its results. We expect these improvements to further improve our margins as it is fully deployed. Now moving to slide nine. This year, and for the first time ever, the company made a strong commitment to accomplish 12 innovation milestones. And I am proud to say that we have made very good progress so far. Out of these 12, we have completed nine and are on track to be achieved the remaining in the coming months. Among others, during these nine months of 2023, we have finalized enrollment both the PRECIOSA and SPARTA trials. The latter, ahead of schedule, advanced from single-to-repeat dose phase in Alpha-1, a 15% subcutaneous study, and progressed in trials across our IG franchises, such as the IVIGPEG study, the CMV5 biweekly study, and the CMV5 secondary immune deficiency CLL study. Worth mentioning is that in Q3, we signed a collaboration agreement with the National Cancer Institute for our GIGA564 project. whose IND preparation has been submitted this October, which sets the stage for GigaGen's first oncology asset to enter clinical development. Also, in the GigaGen front, we have received positive feedback from the FDA in a pre-IND meeting held in September concerning the Giga2339 development in hepatitis B. We recently made important inroads in Alzheimer's space through our company, Araclon, on the phase 2 trial of its vaccine candidate, A-beta vaccine 40. For the treatment of patients with mild cognitive impairment and very mild Alzheimer's disease, releasing positive final results. Regarding biotests, remodeling and fibrinogen trials are advancing as expected. and we are fully focused on capturing its strong growth opportunity. To this end, we have completed the enrollment in the fibrinogen at first trial and are on track to publish top-line results early Q1-24. For the trimodulin escape trial, first patients have already been enrolled. These positive developments are testament to to our commitment to maintain and increase efforts in developing new products and indications, which we plan to continue to accelerate for the remainder of the year onwards. We expect the appointment of York as Chief Scientific Innovation Officer to enable us to execute on our objectives and further accelerate our pipeline. Now, in slide number 10, diagnostic revenues declined 3.1% at constant currency in the quarter, but 0.9% on a year-to-date basis. As mentioned in previous quarters, our NIT technology was negatively impacted due to the pricing concessions given in exchange for extending a large contract with a key customer of ours. However, strong instrument sales in Japan and Indonesia are helping to offset part of this decline. In block typing solutions, we are seeing a strong growth across the U.S., Argentina, and the Middle East, partially offsetting the lower sales of gel cars experienced in China lately. In recombinant proteins contract manufacturing from our Emerville plant, we have signed a renewed 10-year supply agreement with an important partner in the diagnostic field. And now moving to slide 11. In bio-supplies, revenues declined 14.1% in the quarter due to lower cell culture sales driven by subdued demand. We look forward to leveraging the acquisition of Access Biologicals and capturing the full potential of this business unit. And I will now hand it over to Alfredo, who will go through the group's financial performance.

Thank you, Victor. Good day to everyone. Slide 13. Overall, we have delivered strong performance across the board, improving revenues, profitability, and strengthening our balance sheet. Our revenues continue to grow sustainably at 9% at cost and currency in Q3, bringing the year-to-date growth to 11.7%. Our everyday margin continues to show sequential expansion, further improvement to 25.1% from the 23.4% in Q2. On the back of our enhanced profitability, which will continue to improve in the upcoming quarters, our leverage ratio has declined 6.7 times, from 9 times peak of last year. Organic efforts have been a key piece so far on our deleveraging path. Slide 14. Revenue has shown a very positive sequential trend throughout this year. On last 12 months' basis, total revenue has reached more than 6 billion euros, with 11% growth. BioPharma continues to be the key growth driver with a solid underlying demand, particularly in IG, and more notably our SAP QIG product, which continues to gain further traction, as well as our albumin franchise in China. Our ex-U.S. strategy has been also an important growth lever, together with mid-single-digit price increases. Slide 15. Our gross margin has significantly improved over the last quarters, reaching 41% in Q3. These quarters saw the steepest gross margin expansion in recent quarters. improving by 400 basis points compared to the same period of last year. This is due to biopharma's remarkable performance and the 22% decline in cost per liter, which is now clearly reflected in our P&L after a nine-month accounting lag. On the right-hand side of the slide, you can see a significant decrease in our SG&A cost as a percentage of revenue. This reduction, which amounts to nearly 120 basis points compared to Q3 last year, is primarily attributed to operational leverage and efficiencies resulting from our 450 million euros operational improvement plan. Slide 16. All of this has culminated into higher evident margin for the group, reaching the 25.1% in the third quarter and more than 1.3 billion on a last 12-month basis. Year-to-date, it has reached more than 1 billion euros and 23.2% margin, reflecting sequential improvement of 480 basis points compared to end of 2022. Most of the improvement has come from biopharma, dealing by both volume and cost per liter improvement. Our operational improvement plan has made also significant contribution to ABDA. On last 12 months basis, ABDA has increased by 28% with a significant margin expansion. Slide 17. Considering this significant margin improvement, we are now very confident in our ability to achieve the high end of our previous ABDA guidance. We expect full year 23% total revenue growth of 10% to 12% at cost and currency, which is supported by biopharma revenue growth of 12% to 14% at cost and currency. Regarding everyday margin, now we expect for the second half of this year to be at 25% from the 24-25% period range and 24% margin from plus for the full year 23. All of this confirms our adjusted EBITDA guidance of $1450 million by the end of the year. And if we consider the analyzed cash savings, the pro forma 23 EBITDA margin would be in the 28-29% margin range, bringing us back to the pre-COVID margin levels. Slide 18. Building on all efforts made through previous quarters, we continue to make solid progress on our deleveraging path, down to 6.7 times at the end of September of this year. This has been driven by everyday improvement, backed by business performance, cost savings, and operating cash flow improvement. We remain confident to achieve a leveraged target of four times by the end of 2024. Our current liquidity is more than $1 billion, including $454 million in cash. Now, I hand over to Thomas for the final remarks.

Thank you, Alfredo. Maybe to put all of what you have heard into perspective. Last year, we embarked on a journey to turn around Griffith's financial performance, as well as to build an increasingly performance-oriented, efficient, and accountable organization. The third quarter... has been testament to that we are well on the way to meet our objectives. Our fundamentals have never been as solid, and we have delivered a strong performance across the board, executed on our key priorities, and very importantly, delivered on our commitments. One, we have grown our revenues sustainably. Two, we have enhanced profitability and have sequentially updated our EBTA guidance for the full year 23 accordingly and remain on track to reach 2019 EBTA margin levels next year. And three, Driven by all of these improvements and a commitment to deliver a deleveraging transaction of at least $1.5 billion still in 2023, we will strengthen our balance sheet and are on track to reach our guidance of four times by 2024. At the same time, we are not losing sight of what's ahead of us beyond 2023. We are now very focused on realizing Griffith's full potential and in doing so, maximizing value for all stakeholders. Our efforts will concentrate on a number of strategic levers. One, we will build on where we see our core strength and the best competitive advantage. Two, we will continue operating as a global market maker and shaping our markets, seizing those commercial opportunities that are most promising and hold great potential. Three, we will continue to accelerate and bolster innovation, focusing on a select number of therapeutic areas and prioritizing those projects in our pipeline that will boost our profitability and differentiate us with our customers. Under the leadership of Yurk, the architect of fibrinogen and trimodulin, we will strategically strengthen innovation as our future growth engine for biopharma. Four. We will continue to enhance donor attractiveness through personalization of the experience, digitalization and streamlining of processes. Five, we will also continue to improve our business and operations through further process optimization, streamlined operations and digitalization to drive efficiency. And sixth, as a market leader, we will explore new markets and business opportunities while we enter into agreements to deliver groundbreaking, differentiated patient and customer solutions. Importantly, these six strategic pillars will be backed by a performance-oriented management team and a strong people and talent development culture. We will build on the current progress and momentum while maintaining strong financial discipline, both with regard to P&L and balance sheet management to ensure strong, sustainable long-term financials. In the coming quarters, we will give you more details of all our strategic levers and update you on the progress as we continue to deliver to our commitments in the short term. I want to conclude by reiterating how encouraged I am by all our progress in the first nine months of the year. And I do want to thank the entire Griffles team for their hard work and dedication. I appreciate your attention. And I now turn it back to Nuria, who will open it up for discussion. Thank you.

Thank you, Thomas, and thank you all for your time. Now let's start the Q&A session. Just as a reminder, you need to press star five to ask a question, and we need to stick to two questions per analyst, and if you have follow-ups, you can dial star five again, and then we will place you once again in the list. After your question, we may need to put you on mute to avoid background noise. Okay, so we have already a few requests for questions. First question today comes from Tom Jones from Berenberg. Good day, Tom. Hello. Hello.

Oh, good morning. Good afternoon. Thank you for taking my questions. Both of them really relate to the tech transfer agreement that you've recently signed with Biotest. One is just a straightforward financial one, really. I think Biotest this morning guided towards somewhere around a mid-triple-digit million number. payments in total over the 23, 24, 25, 26 timeframe. It would be helpful for us to try and understand sort of broadly how that might be weighted just to help us model a sort of free cash flow over the next couple of years. And then related to that, sort of related to the master distribution agreement you also have with them, just wondering how you're intending to position Yumungo, their novel IVIG products, against your existing Gammynex and Zembify brands and how you make sure you don't cannibalise each other inadvertently and ultimately create the most revenue and value across the entire IGG franchise with all our products. So some idea of a sort of commercial marketing strategy for those different IGG products would be helpful, I think.

Thank you, Tom, for your question regarding the trans-strategic agreement with... With BioTest, you know, basically this is, you know, what you have seen in the pre-release is on a standalone basis. On a consolidated basis, it's a wash. The payments related to this agreement will be done based on the cash flow needs of biotest, so it will not be an impact on a consolidated basis.

Good afternoon. I take the second piece of your question. It's about positioning of Gmugo. As you know, in Grifols we have two main intravenous brands. One is Gamonex and the other one is Flevogama. Our idea is to, due to basically the better years that Gmugo has compared to Flevogama, is to, with time, once the product is approved in different countries, to to commercially switch from Flebo to Imugo. This is kind of, in summary, the strategy we are pursuing.

That's really helpful. And I'm only allowed three, but it's a really quick one. The 13.7 million of restructuring charges in Q3, which line item were they booked in? Just helps us tidy up our models.

So depending on, I mean, if we're talking about severance, you know, there will come severance for, I would say, for the manufacturing area or from, I would say, corporate structure. They go either to Cox or to SG&A. I mean, for further details, you can follow up, you know, all the specifics with my team.

Okay, we'll do it. Thanks very much.

Thank you, Tom. We have a question now from James Gordon, JP Morgan. Hello, James.

Hello, James Gordon, JP Morgan. Thanks for taking the questions. Two questions, please. First one was on divestment plans. The question was just what is the cause of it taking maybe a little bit longer than we thought to close? It has been about five months since the June update. Is it that you're looking to do something more complicated, like maybe a combined transaction, divesting some of Shanghai RAS and diagnostics, or some factors related to dynamics in China at the moment? Or why has this taken a bit longer and why are you still confident? And the second question was just on biopharma growth. So strong performance in the quarter, I think it was 14.5% year to date and 13.7% in the quarter, but you're still guiding for the full year to grow 12% to 14%. So that's quite a wide range of only two months of the year left. and it does imply potentially quite a slowdown in Q4. So is that just conservatism, or is there some tougher things going on in Q4? I can see you've maybe got a tougher comp for biotest, or is it industry dynamics with Alpha 1? Why might things theoretically slow so much in just the last few months of the year?

Hi, James. This is Thomas. I'll take your first question. And first of all, let me just remind you that Shanghai Rust, which obviously is the asset we're talking about, is extremely attractive. And there have been many, many people that have had an interest in this asset. Now, also, this being a China transaction, it's a very complex environment to negotiate in. We do want to make sure that this turns out to be a good transaction, both in the short and long term, for Griffill. So that has taken time. And we obviously want to make sure we cross all the I's and T's. But it's really not more than the fact that getting anything done in China does take a lot more time than if you were to do it in Europe or the United States.

Okay, I take the second part of your question. No, we are fully committed to meet our targets of revenue growth, both combined with biotest and biopharma on a standalone basis. It's fully there.

Thank you, but I think it was just that the full breadth of the range would imply that there might be quite a slowdown. So is it just you don't want to change the range at this time? Because to get to just 12%, you'd have to have quite a slowdown versus what you've done in the first nine months?

We've had a very strong, in fact, Q3 quarter. For Q4, we stick to our budget, and if it comes as good as Q3, we will try to deliver, of course, but it's kind of, you know, this quarterly thing, sometimes the swings are not really, let's say, underlying reality.

Thank you, James. Next question is coming from Thibault Bouterin from Margaret and Sally. Hi, Thibault.

Hello. Thank you for taking my questions. Just one on albumin to start. I mean, the numbers seem to imply you had a very strong acceleration of your albumin cells in the third quarter. So I just want to understand what happened there. Is there any one-off? So this is the first question. And the second one on deleveraging and Beyond the Shanghai Rath stake sale that you kind of confirmed, do you still have an appetite to do another transaction before the end of 2024? And how large this deal would need to be in order for you to get to your leverage target? Like, does it need to be as big as Shanghai Rath, or could you do something smaller and get there? Thank you.

No, we are seeing a strong momentum in albumin, both in China and other important regions globally. And we are meeting our demand. As the plasma is coming back, we are meeting this demand that is out there for us. So it's perfectly in line and it's fully, let's say, controlled.

Hi, Thibault. Thomas here. We are actually very focused now, 100% on signing the China transaction and are actually at this point in time not looking at anything else. We believe that the organic deleveraging combined with the transaction is going to get us to the target that we set for ourselves for 24.

Thank you, Thomas. Thank you. Then next question is coming from Alvaro Luenze from Alantra Equities. Hello, Alvaro.

Hi, thanks for taking my question. The first one is if you could provide some additional detail on the evolution of Alpha 1. They seem to be a bit weak. I don't know whether it's that final demand or increased competition from other plasma players. And the second is if you could provide some guidance on cash flow. I see that investment in working capital remains very high. I don't know if we should expect continued investment in Q4 and also into 2024. Thanks.

I take the first one. Good afternoon, Alvaro. On AlphaOne, as we said, we are seeing today a kind of flattish evolution in this franchise for us. There are many, many components. As you know, we have a pretty unique, let's say, business model when it comes to commercial products. especially in the US and our historical markets. After the pandemic, we are fine-tuning this model. As you know, a key important factor for the model is the first piece in the funnel is the testing piece. Just in May, we launched the new testing tool, which is the Alpha ID at Home, which is a complement to the healthcare professional testing model. So we are fine-tuning there. We expect this, let's say, flattish strength thing recently. We'll be turning it around during 2024. As I said, we make some small tweaks in our operating model to adapt to the new times after the pandemic.

Hola, Alvaro. To your question of the cash flow, you know, in the Q1, you know, we have, you know, that hit, as you know, the restructuring cost, you know, most of the payments were done in the Q1. And since then, we've seen a significant, you know, positive increase on cash flow. And we're going to see this not only in Q1, I mean, Q2 and Q3, but also in Q4. Regarding the inventories, yes, we've seen some increase in this quarter, but year-to-date, we are in the same days, inventory days around 300, which is in line with the previous year. Remember that just by maintaining the number of days, but due to the increase of the activity, I mean the sales activity with this double-digit growth, this requires additional inventory. But for the year-end, we're going to see, you know, a very positive, you know, cash flow before that service. Thank you.

Thank you, Alfredo. We have a question from Guillermo Sampaio from CaixaBank. Hello, Buendia.

Hello. Thank you for taking my questions. So, first of all, a follow-up on this previous question. In terms of specifically in organic deal averaging, so we keep seeing net debt going up. When should we see a decline in net debt? So, whether next quarter or something for the next year? Actually, of course, the effect of the deal averaging transaction that you are anticipating. And second, if you could touch upon the slowdown in the diagnostic area that we've seen specifically in this quarter.

Okay, for the first question, I mean, the net debt reduction will be seen, you know, primarily on the back of the cash proceeds, you know, coming from the divestment because even though we see that our operational cash flow is going to keep improving during this year and next year, but, you know, we need to leverage to reduce basically, you know, the interest expense.

On the diagnostic question, you talk about the slowdown, I think, in this quarter. If I understood correctly, it's good to remind that in Q2 we had an exceptional, let's say, revenue or income coming in this one. That, of course, is an exceptional one, and it's not happening in this quarter or the others to come.

Okay, good. And Now we have a couple of follow-ups. So, Tom, I think you have some additional questions.

I did. It was just one, really. It was a broader follow-up question around your kind of building pipeline. And if I look across everything, you've got a building number of assets, whether it's the two gigaproducts, 564 and 2339. You've got the Alkahest AMD product, the 4290 product. Then there's 6019 and 6021, I think, from Alkahest as well. Plus you've got The Alzheimer's vaccine, you know, you've got all these sort of non-plasma, like some of the alcoholics ones are plasma products, but you've got a lot of kind of non-core products building up in the pipeline, which is great. But I just wondered kind of what your long-term... thinking around the development of these products is, because to be frank, at the moment, the market just puts a multiple on the R&D spend of them. I don't think anyone's got a penny of revenue in anybody's model for any of these products. So as it sits today, they're a bit of a drag on the equity story. So I just kind of wonder what the long-term strategy is. Is it to keep these, take them all the way through to development and marketing, or at some point do you think you'll start out licensing some of these products and tying up with people who might have more expertise in late-stage oncology drug development. I just wonder what the kind of big picture here is, because at the moment, you know, they're all cost and no benefit from the equity markets perspective.

Thank you, Tom. Yeah, it's a very, very good question from your side. Yeah, clearly... Trimodulin and fibrinogen will play a key role here as plasma will be in our core both in the day to day in commercial and manufacturing but also for our future developments. So plasma clearly will be in the core with those two products and the complement coming from our life cycle management that we are doing in different products. On those new technologies, for instance on GigaGen, when we made the acquisition of this asset or this technology, I should say, was in line with our gamma globulin product portfolio. We saw that an interesting opportunity in the way we can obtain gamma globulin or specific gamma globulins from this technology. It happened that that company came also with this oncology product interesting initiatives or programs there, and we just wanted to continue them. Going forward, if some of them are successful, we are clearly open to define and decide whether this remains in our core, and we, let's say, expand to oncology, or we kind of license whatever is the form for those, let's say, non-plasma programs.

Okay, that's very clear. Thank you. Now, Alvaro, I'll just follow up. Hello?

Yes, thanks for allowing me to jump back in the queue. Just two questions. First is on capacity and considering the fast growth in activity. If I am not mistaken, I believe in Q2 you mentioned that you were around 60% capacity or something like that. If you could provide us an update on how is that trending and when should you return to higher CapEx spending as CapEx is currently running lower than it has in the past. And the second question is just if you could provide some guidance on the evolution of minority profits attributable to non-controlling interests. They have been trading a little bit higher than I expected. There's little visibility as some of the... Companies here do not have a report of the VTA, like the plasma collection networks of HEMA and BioTest US. So whether we could extrapolate this $30 million per quarter indefinitely, or you could provide some guidance for this year and next year. Thank you.

Okay, I take both questions. Regarding capacity, yes, we confirmed in the last call this 60% capacity for this year. Based on the upcoming sales growth and our projections, we expect that the next wave of CapEx expansion will take place in 2028. So we have clear paths, so lower spend from now to 2028. Regarding the minority line within our P&L, for your model, you can extrapolate 100 million per year.

Okay, apparently there were two persons who were trying to access and were having some kind of problems. We will try to give access from our side. We have Peter Fadul from Citi. Can you hear us, Peter? No? Okay, we'll... No, okay. We'll try again later. And then Charles from Berkeley, Charles Pittman? No? Okay. While we solve this, let's continue with Thibault. You also had some follow-up. Can you hear us?

Hello, can you hear me? Can you hear me? Yes, yes, we can. Okay, perfect. Perfect. So, first question on the funding of the Alzheimer's vaccine, potential phase three. Just wanted to know if you're kind of open to out-licensing this or finding a partner to fund the R&D or if you're willing to fund it yourself. And then second question, When we think about the underlying adjusted EBITDA this year, you know, pro forma including savings, the 1.75 billion, you know, how comfortable are you with kind of consensus using this as a base, you know, going forward and using it as an underlying profitability guide for next year? Is there any kind of accounting element or business element we need to think about that would make it a good approach to do that?

Thank you. This was an important milestone for us that we have been waiting, the phase two clinical trial and data out of that. As you have seen, very positive data across the board. The idea, and this is linked to a previous question, yeah, we are very open to study potential licensing this product for the phase three.

Thank you, Victor. And apologies to all, but we could not hear you very well, the second part of your question. Can you summarize? It was on the accounting.

Yeah, of course. Are you comfortable with analysts and consensus using the $1.75 billion of underlying adjusted EBITDA margin that you are guiding, including all the pro forma savings? Are you comfortable with this being used as a base when you think about EBITDA next year? So basically, you know, including growth for next year. So basically, you know, what consensus is, is basically using these numbers as a base for this year and growing it next year. So just want to understand if you're comfortable with this approach.

Yes, we could hear you well this time. Thanks for repeating the question. Yes, we are comfortable with this 1750, considering this, you know, cash savings that they're going to go into 2024 so therefore yes remember that out of the 450 million operating cash savings 150 roughly will flow through the panel this year and 300 next year so that's why we that's how we come up with this 1750 so yes we reaffirm that we're confident Thank you Thank you

Hello, we have a question from Jaime Escribano, Banco Santander. Hola, Jaime.

Hi. Good afternoon. So a couple of questions from my side. Regarding the gross margin, if Grifols is standalone, 41% in Q3. You look at 2019 where Grifols was making 46%. But the cost of plasma keeps going down, and I remember you mentioned that in Q4, We should see the fully loaded or almost fully loaded impact of the cost-saving plans. I wonder how do you see this 46% gross margin affordable in following quarters? And even if we could think about a gross margin higher than that, that would be my first question.

Okay, Jaime. Yes, the... As you know, we need to consider in our industry this nine-month accounting lag for the plasma cost. And as I said, you know, out of the 450, 500, 300 are coming next year. So they're going to go through the P&L. Most of these 300, which the majority relates to plasma, to plasma cost. So, yes, we're going to see that this gross margin is going to keep growing on sequential basis, which basically, you know, this high gross margin is at the same time is going to have a very positive impact on the quarterly ABDA improvement in the coming quarters.

And you had a second, Jaime?

Yes, my second question Sorry, I think there was some echo. Yeah, no, it was regarding the Canada plant. When do you think we can start seeing revenues coming from the new manufacturing facility there? And what could we expect?

We were there a few months ago, the whole team meeting in our Canada plant. I can tell you that the CAPEX is progressing, the finishing of that. We can expect to see some production coming out of this facility during 2025. Okay, thank you.

Thank you. Now, I think we have recovered from Barclays. Charles Pittman. Charles, can you hear us now and whether we can hear you? Hello?

Hi. Can you hear me now?

Yes, yes. Apologies for that.

Amazing. No, no worries. Thank you very much for taking my question. Just a couple on the Shanghai RAS deal. I was wondering if you could just provide us with a little bit more detail around what the regulatory hurdles are approvals are that you are currently navigating with this deal and what approvals do you need and when to kind of get confidence that you can announce this signing that you know you and kind of if you just reiterate what gives you confidence that you're able to sign this by the end of the year and then just secondly on the kind of one and a half billion dollars of cash realization can you confirm if this is a pre or post tax amount and and what gives you the confidence that you can, in fact, realize that. And can you just reiterate that you are confident you will be able to realize that cash and you'll be able to use that to pay down debt? Thank you very much.

So let me take the first part. First of all, at this point, we are very confident that we can take the transaction across the finish line before year end. Because at the end of the day, some of the regulatory pieces will come in next year, in the first half of next year. So that's not preventing us from the signature as such. So we're going to sign, and we are pursuing the regulatory. And as we said, we expect that both – The closing will take place in the first half of next year.

Regarding the cash proceeds, this is at least $1.5 billion. This cash proceeds will be used in full to reduce debt.

Okay. Also, we have Peter Fadul from Citi. Hello. Hello. Can you hear me? Yes, perfectly. Thank you.

Thank you. Thank you, everyone. Three questions, please. Thomas, for you firstly, when you initially put that press release out in June, you talked about the transaction and remaining a significant shareholder in Shanghai RAS. So could you maybe reconfirm that or have things changed? And can I be cheeky and ask what, in your view, is a significant shareholding still in RAS post the transaction? Question number two, Maybe for Victor, I think it would be helpful for us in the market, good growth on ZemberFi. It's a long-term growth driver. Historically, you said 5% to 10% of sales coming from IG sales are ZemberFi. Are you willing to put a ballpark number as to where we are end of this year, where we are on ZemberFi? And then lastly, I joined late, apologies, but I did hear Jimmy Gordon's question about the guidance. Can I just invert it and make it more simple? Is it fair to say that the risks, given the trends you're seeing so far in Q4, that the risks to your guidance is very much to the upside rather than downside, as James is implying, in terms of mechanically keeping that 12 to 14? So three questions on RAS, Semify, and upside risk to guidance, given the Q4 trends you're seeing.

Thomas, okay, I'll take the first question and appreciate it. With regard to our ownership and all of that, we're going to let you know all of the details once we announce and once we sign. But I do want to remind you that we have a strategic alliance with Shanghai Ross and we have an album and distribution agreement, both that are very important to us. And also our future position in China is important to us in a strategic market. So as we, you know, proceed with this deal, all of these pieces will be a very important part as we conclude and sign the deal on Shanghai Rusk.

On the second question, hello, Peter. Yeah, as you probably can see in the presentation we released to date, the growth phase of subcutaneous versus our IV product, it's clearly higher. So this is, as we move every month, every quarter, The share of subbotanical versus the overall, it's increasing, and we expect this to continue. I don't know exactly at which level, but we expect this to represent with the time a significant mix in our IG portfolio.

Regarding the guidance, I mean, the... As you know, the growth is, you know, is very important to understand that it is based on the baseline, okay, of previous year. And also, you know, when you look at the reported basis on the ethics. You know, for the Q4, we expected, we still expected a strong quarter. But the reality is that when we look at the amount, you know, the amount of the fourth quarter is going to be higher than the previous quarter. However, the baseline varies from one quarter to another quarter when you compare with previous year. But said that, we reiterate this range for net revenue guidance for the year end.

Thank you. We are coming close to the hour, but we have two follow-ups, one from Jaime and another one from Charles. Please, if you can make kind of one question each so that we conclude with that session. First, Jaime. Thank you.

hi uh thank you yeah mami's is fairly quick and it is regarding the the pipeline um so you announced um the alzheimer back vaccine results first without quite recently just to know what could we expect following following steps And is this a big opportunity for you, or can you try to give us some kind of sense how excited you are with this? And just a very quick one also related with the pipeline, which is the ASCA in 2018 said that they were going to review the guidelines and that in 2023 they would start reviewing recommending again products. Is this something that could be on the table again, you know, to try to revive the AMBAR project with the ASFA, or you don't have a lot of expectations on that?

Thank you. Thank you. Yeah, on the Araclon vaccine, there was a question previous, and yes, it's a program that we are open to license the financing of this phase three trial that it should go now. That's the status as of today on Grifols regarding this vaccine, looking for a kind of a partnership here. On the ASFA inclusion of the AMBAR protocol into their guidelines, yes, it has been included in one of the guidelines, so now it's a procedure that can be used out there for patients. Regarding the AMBER in general for Grifols, we are kind of in a standby mode. We are in talks with regulatory agencies to see opportunities on how to proceed. But to the ASFA question, yes, it has been included.

Okay, I'm sorry, just to follow up, but then is there any opportunity to monetize AMBAR through this recommendation of the ASFA or to get it into the insurance or any growth potential coming from there?

At this stage, we are, let's say, moving cautiously, I should say, in the sense of slow. Okay, we are trying to understand which are the potential possibilities that we can... see for this program in relation with the inclusion of the protocol in the ASFA guidelines.

Okay, and last question for today's session, Charles. Hello, Charles Pittman.

Hi. Thank you very much. Just very quickly, can I just get this 100% clear? The $1.5 billion you expect to receive in today, that's a post-tax amount. And then just the actual question I had to follow up was just talking about the expected potential for other cost savings, given you've now hit the kind of top end of your target for FY23. What other further levers are there that you're seeking to identify going forwards, or is the focus very much just on normal operational efficiency? Thank you.

Okay, for the 1.5, this is going to be cash. I mean, cash, you know, I mean, no taxes. When you receive the cash, there's no taxes on this. And then... Regarding the operational improvement plan, as we said, you know, this year we're going to achieve through P&L the 150 plus the 300, as I said, for next year. The 450, I think that, I mean, we continue working to exceed that 450. There are some opportunities already mentioned by Victor on the manufacturing side. So this is a non-stop, I would say, working, and I'm pretty sure that more savings will come in the upcoming quarters.

Thank you, Alfredo, and thank you, everybody, for joining us today, and expect to talk to you very soon. As always, any follow-up, any other questions you may have, you can contact us at the Investor Relations and Sustainability Department, and we'll be happy to take other questions also from all participants. Thank you very much.

Thank you very much, everybody. Bye-bye. Thank you. Bye-bye.