Ipsen Sa S/Adr

Hello and welcome to Ibsen's conference call and webcast on full year 2024 results. I'll now hand you over to David Lowe, Ibsen's CEO.

Thank you, operator, and hello, everyone. I'm delighted to welcome you to our presentation this afternoon, which can also be found on Ibsen.com. I want to use the time we have together to focus on the progress Ibsen delivered in 2024 and on the future opportunities and platforms for growth. Please turn to slide two. Please take note of our forward-looking statement, which outlines the routine risks and uncertainties contained within this presentation. Also, any of my commentary on growth will be based on constant exchange rates. Please turn to slide three. I'm going to take you through our brief presentation of our performance, followed by our CFO, Emre Klechatelier, who will provide you an update on the financials, and our Head of Research and Development, Christel Uege, who will focus on the progress and the key milestones of our pipeline. At the end of the presentation, all three of us will be participating in the question and answer session. Let's begin by looking at today's highlights. Please turn to slide four. I start focusing on the business. Please turn to slide five. Today's headlines illustrate how we are continuing to produce sustainable growth. In 2024, total sales grew by 9.9%, a result that is driven by the strong performance of our ex-Somatalin portfolio, which grew by 12.2% over the year. We also delivered a core operating margin of 32.6%. Since the beginning of the year, we have made strong progress with our pipeline, including a positive FDA decision for Onivite in first-line pancreatic ductal adenocarcinoma in February, U.S. approval of iCorva in June, followed by the EMA's approval in September, along with Kaifunda approval in the European Union in Allerger syndrome. Looking ahead, 2025 promises to be another exciting year for our pipeline, with four key milestones including anticipated approval of cabometrics in neuroendocrine tumors in the EU and the EU regulatory filing of tovaracinib, both in H1. In H2 2025, we anticipate a pivotal trial readout of phytocertis in SOP and, excitingly, our first proof of concept data for our long-acting neurotoxin, or LAND, in aesthetics. Crystal will cover those in more detail. Lastly, our 2025 guidance includes total sales growth greater than 5% at constant exchange rates and a core operating margin greater than 30%. Emrik will provide more details in this section. Please turn to slide 6. Looking at our sales performance, Oncology has performed well this year, reflecting the growth of Kabometics and ongoing Onivite launch. Rare disease continues to stand out, driven by the sustained success of Bilvey and the first-time contribution of Aquabol. Neuroscience comprising this bird delivered strong and consistent growth. I'll now turn to oncology for more detail. Please turn to slide seven. Starting with somatolin, sales were up by 5.6% for the full year. Both Europe and the U.S. have experienced shortages of generic lanolatides, allowing us to see uplift in both Q4 and full year. Cobametic sales were up 13.3% for the full year, with increased volumes in both first- and second-line renal cell carcinoma across all geographies. Decapetil sales were down by 1.1% as we experienced increased competition and pricing pressure in Europe and China. We anticipate that decapetil will go back to growth in 2025. Pesveric sales rose by 24% despite the highly competitive environment in third-line indication and follicular lymphoma and supported by share gains in epithelioid sarcoma. Online sales grew 23.7% for four years, and were driven by the US that I will detail in the next slide. Please turn to slide eight. Zooming in on Omivite in the United States, where we continue to progress with our launch in first-line metastatic pancreatic carcinoma. Sales increased by 19.9% for the full year, and we continue seeing a steady climb of monthly sales. In addition, we achieved 32% growth in the top 25 accounts for the full year. However, it is important to note that changing prescriber's behavior in this challenging indication is taking time. Our key priority for 2025 remains expanding utilization from academic centers to community practices as we continue our efforts to educate healthcare providers. We're also generating additional data and have recently presented new results at ASCO-GI showing improved overall survival of first-line onivite in Napoli Phase III versus real world for furinox in the U.S. Let's now turn to rare disease on slide 9. Finway continues to grow nicely with annual sales of 136 million. In the PFIC indication, growth has been driven by strong global demand and our market leadership. In the U.S., we continue seeing uptake in allergen syndrome. For the whole, sales continue to struggle due to loss of patients to clinical trials and the label. This quarter, we had to make a decision to adjust our peak sales expectation, which Emerick will discuss in more detail. Turning to iQurbo, sales reached 22 million with a continued uptake in the US following first-line approval in June and positive early momentum in Europe. Let's zoom in on the launch on slide 10. The launch continues with good momentum and in line with our expectations. In the US, we see a significant increase of monthly demand and over 85% of prior authorizations being approved for patients. We see our prescriber base continue to expand in a growing second-line market, with the majority of iQuervo patients being second-line naive, but also some switches. We also presented new data at ASLD last year, showing the long-term benefits of iQuervo across biochemical efficacy, fibrosis, symptoms, and safety. Notably, the data also showed an improvement in fatigue, which impacts over 80% of patients with PDC, which we think will be important data moving forward. In Europe, we launched iQubo in Germany and Austria and are already seeing strong patient uptake. In the UK, we had simultaneous NHRA and NICE approvals in October, which is extremely rare, given UK patients immediately access to iQubo. Lastly, we have also initiated reimbursement processes across several additional European countries and rest of the world markets. Moving to neuroscience, let's turn to slide 11. This report delivered another year of solid performance with sales growth of 9.2% for the full year. In aesthetics, sales grew by 8.3%, driven by continued expansion in most territories and marketer gains in key countries such as the U.S. and Brazil, despite some softening of the U.S. market. European markets remained resilient, delivering solid growth. However, fourth-quarter sales were impacted by adverse shipment phasing in the Middle East and North America, while performance in other regions remained strong. On the therapeutic side, sales increased by 10.4% this year, with robust momentum in the US and Latin America. Market share gains in specificity played a key role in driving growth across most markets. We look forward to another year of growth in 2025 for this part. That concludes the sales review. I'll now hand over to Emrik. Please turn to slide 12. Thank you, David, and hello, everyone.

I will now take you through more detail for 2024 financial performance, our guidance for 2025, and lastly, our sustainability progress. Please turn to slide 13. We delivered another set of very strong financial results this year across sales, coin and cash flow. Our total sales exceeded 3.4 billion, growing by 9.9% at concentration rate, as presented in detail by David. Our corporate income grew by 10.8% to 1.1 billion, while our free cash flow increased by almost 9% to 774 million euros. With that, we have a strong balance sheet, no debt, and we have 2.3 billion of firepower available for external innovation based on two times EBITDA. Let's take a closer look at those financials in the next slide. Please turn to slide 14. Starting with the core P&L, the growth in total sales of 9.9% at consensus exchange rate, translated into 8.7% at current rates, given adverse currency movements from mainly emerging markets. Gross margin decrease was limited to 0.6 percentage points due to another payment in 2023 received from our ex-US partner for Omivide. R&D costs increased by 10.9% and exceeded 20% of sales for the first time at 20.2%, driven mainly by the continuous investment in our internal pipeline across the three therapeutic areas and through our external innovation. SG&E costs increased only by 3.3%, with the ratio to sales at 34.4%, improving by 2.2 percentage points. This reflects our commercial investment to support the launches, especially in the U.S., but also the positive impact of our efficiency programs. As a result, our co-operating income increased by 10.8%, with a co-operating margin at 32.6%, improving by 0.6 percentage points. Please turn to slide 15. Turning now to the full P&L to net income. This quarter, we recognize an impairment loss of $281 million before tax, almost entirely related to SOHOMOS, as David said, which is due to lower than anticipated patient uptake and revised sales. It's worth noting that we no longer expect SOHOMOS to exceed the 100 million peak sales. As a consequence of that impairment, IFRS operating income and consolidated net profit decreased significantly versus 2023. At the same time, our core EPS continues, however, to grow double-digit at 12.3%, in line with core operating income increase of 10.8%. The dividend for 2024 to be paid next week will increase from €1.2 per share to €1.4 per share, as proposed by the Board. Please turn to slide 16. Finally, on cash flow, we continued to generate strong free cash flow this year and had a very healthy balance sheet with a cash position of 160 million euros at the end of December. Free cash flow increased by 8.9% to 774 million euros, driven by EBITDA, growth in line with cooperative income, and sound management of working capital and capex. Net investment, including payments related to the external innovation transaction, for a total of more than 300 million euros, including five practical transactions and the licensing agreement with Day One Pharmaceutical, together with the milestone paid to Merrimack and Exelixis for Omivide and Camomitix for around 400 million euros, partially offset by the proceeds from the sale of the priority review voucher and the disposal of Increlex. With a net cash position of 160 million at the end of December, and based on a maximum two times net debt to EBITDA, we have now an available firepower of 2.3 billion euros for external innovation. Let's now move to 2025 guidance. Please turn to slide 17. In 2025, we expect a new year of sales growth despite anticipated somatolime generic erosion. For total sales, we expect growth of more than 5% at constant fixed rate. This year, we also anticipate a favorable impact of around 1% from currency. This guidebook is based on an accelerated growth of our portfolio, excluding Somatulin, driven by the further impact of the launches of Alcuro, Omivide, and Bilve. We assume that Somatulin will face an increased competition from low-intensity generics in the U.S. and in Europe, including a progressive resupply from the current generic in the U.S. and in Europe during the first half of this year and the launch of an additional generic in Europe and in the U.S. likely in the second half of the year. For profitability, we expect a cooperative margin greater than 30% of total sales, including additional R&D expenses from potential early and mid-stage external innovation opportunities. We will continue to generate efficiency in our cost base to invest into ongoing launches in the US and in Europe to grow our pipeline and also to prepare for potential future launches. Please turn to slide 18. Finally, let's look at our Epson System Ability commitments. In 2024, we made additional progress in our environment roadmap to allow our 2019 sustainability goals, achieving a 45% reduction in scope 1 and 2 in-house gas emissions and a 25% reduction in scope 3. We also reached 99% of the electricity used across all our sites coming from renewable energy sources. Coming to the people component of our ESG strategy, we target gender balance within our global leadership team, which we have achieved with women representing more than 55% of our leadership team. This year, we are also pleased to share the recognition of our effort by key rating agencies. Ipsen achieved its highest score in the S&P global ranking, placing Ipsen in the top decile of the pharmaceutical sector. Our system analytics risk rating further improved to 22.8, and MSCI rating maintained their level at A. With that, I will now hand over now to Christelle. Please turn to slide 19.

Thank you, Henrik. Good morning and good afternoon. Let me start by reminding you that Ipsen has built a strong research and development engine from preclinical research to clinical and late-stage development, including expert pharmaceutical development and regulatory submission. And thus, we are well equipped to support a sustainable pipeline. Please turn to slide 20. Here you can see our well-balanced portfolio that continues to grow across the three therapeutic areas in phases of clinical development. IPN 1194, which targets the MAP kinase pathway as an ERK inhibitor, entered dose escalation following an IND filing in 2024. We expect another phase will start in 2025, as well as a new IMD filing as we continue to execute on our preclinical strategy. Both our oncology and rare disease pipeline have a number of ongoing phase 2 and phase 3 trials with upcoming data readouts that I will highlight later. I will now focus on the neuroscience portfolio and our ongoing research in neurotoxins. We continue to advance our Phase III program for this sport in chronic and episodic migraine, and we have further expanded our long-acting neurotoxin program with patients now dosed in the Miranti study in migraine, in addition to our ongoing Phase II in aesthetics and specificity indications, which I would like to share more on. Please turn to slide 21. Starting with our latest innovation in this field and our long-acting neurotoxin AB. This is a fully recombinant toxin, specifically engineered to bind to the receptors used by the botulinum toxin B and deliver the active light chain of the botulinum toxin A, as illustrated in the image shown on the slide. This construct delivers both an increased receptor affinity and rapid cell internalization and leverages a higher receptor B density on neuron cells. We have demonstrated a longer duration of action of our LAND-AB compared to currently purified available in PONT-A in preclinical studies. We have also shown that the LantAB engineered properties resulted in less tissue spread in preclinical models, indicative of a potential for better therapeutic index for patients. We believe LantAB has the potential to deliver better outcomes for patients with an increased duration of action, leading to a potential reduction in injection frequencies and a potential for enhanced tolerability. As previously mentioned, we continue to expand our clinical development of LantAB with the addition of NIRANTI, evaluating patients in both chronic and episodic migraines. Finally, the Lantema study is advancing well, and we expect proof of concept for Lantek in the second half of this year. Please move to slide 22. Turning now to oncology and our late-stage portfolio with tovoracinib for pediatric low-grade glioma, where there's a significant unmet medical need with no clear standard of care in second line. Tovoracinib specifically targets mutated form of RAS in the MAP kinase pathway. Decentimus builds strong expertise in this pathway. with IPN 1194 in phase one, and other assets in this pathway in preclinical development. Pediatric long-wave gliomas are the most common tumor of the central nervous system in children and adolescents, accounting for about 30 to 40% of all tumors. While many patients with PLGG survive into adulthood, they face a severely reduced quality of life. We expect to find in Europe in the first half of 2025, based on the digital phase two study Firefly 1. The global phase three Firefly 2 study remains ongoing, and we expect this program to be fully recruited in the first half of 2026, evaluating total affinity in first line setting. Please move to slide 23. Supplementing our internal research, in 2024 alone, we added six new partnerships in oncology and neuroscience. The main focus was on expanding our early stage pipeline and applying our translational expertise to shape their clinical development. We added some exciting new modalities with sutro-enforcins, highly selected antibody drug conjugates with high drug-antibody ratio, and with Morango and Pyrominex platforms, T-cell engager, engaging distinct and specific T-cell subsets. Finally, not forgetting one late-stage asset, tovoafenib, that we just reviewed. I look forward to providing updates on these programs as they progress through development. This leads me to turn to our upcoming milestone. Please move to slide 24. Here we show key data readouts and regulatory events for the next two years. In the first half of 2025 in oncology, we are expecting a decision from the European authorities on cabometrics in pancreatic and extra-pancreatic neuroendocrine tumors. And we are submitting to Vorafenib in Europe for relapsed refractory pediatric low-grade glioma based on the pivotal phase 2 Firefly 1 study results that gained an FDA-accelerated approval last year. Later this year in rare disease, we have the readout of FALCON, our registrational phase two study with feed-researching in fibrodysplasia ossificans progressiva, where we hope to bring an important new treatment option to adults and children over the age of five living with this debilitating ultra-rare bone disorder. In neuroscience, An important readout is the LANTIC proof of concept for our LANT-AB in aesthetic indication. 2026 will be a very busy year as well for the pipeline, with several anticipated Phase III data readouts across all three therapeutic areas, and that includes Tesveric, iCurvil, and Belvay, as well as migraine trial readouts for these sports. I will now hand back to David to conclude this presentation. Please turn to slide 25.

Thank you, Christelle. I will now move to the concluding. Please turn to slide 26. We show a strong momentum and are delivering on our 2027 objectives, and I want to leave you with three key messages. First, we're showing a continued top-line growth based on our strong portfolio and delivered solid 2024 results. We aim to continue delivering excellence in execution across commercial and medical domains. This is key to grow our increasingly diversified, balanced, and expanding business. We are also advancing our research and development pipeline at high momentum, with multiple upcoming milestones, including several potential regulatory approvals this year and key data readouts, as well as the completion of six pivotal trials by the end of 2026. We also continue relentless and diligent evaluation of external innovation opportunities to further strengthen our portfolio and have the firepower to do so. With that, please turn to slide 27. This concludes our presentation, and Christelle, Emmerich, and myself will now take your questions. Operator, over to you now.

Thank you. If you would like to ask a question, you'll need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Thank you. We will now take our first question. This is from the line of Xian Deng from UBS. Please go ahead.

Hi, thank you for taking my questions. So, yeah, if I may just ask a broad question also mentioning, please. Thank you for giving us a color on what you think about the generic entry. Just wondering, could you actually build on top of that to give us a color on what you expect in terms of the cadence of erosion pattern in 2025, please? And a kind of second question related to that is just wondering if you could give us some colors of what have you seen so far in Europe as well as U.S. in terms of generic competition, please. Thank you very much.

Thank you, Jeanne. On somatolin, as you have seen since about August, Sibla and Advance went into significant shortages. They are trying to correct that because it comes from the same supplier, which is Pharmaten, a company based in Greece, which is, by the way, also producing the generic Oxtra type. Our assumption is that the cadence of erosion is going to accelerate somewhat in comparison to historic levels because we also anticipate that some pharma might be entering the market probably around half this year. They have received the approval in the decentralized procedure in Europe in October, but have not launched yet. So we have to see what's happening there. And then on Europe and U.S., I think on your second question, I think it links to my first remark, what was happening in the past. And so this is our current assumption, but we have to say it's relatively hard to have real visibility here. So our assumption, and this is why we have guided as we have guided, is that we're going to see a somewhat increased competition and a somewhat accelerated erosion for the future. Thank you. Next question.

Thank you. We'll now move to the next question. This is from John Preusner from J.P. Morgan. Please go ahead.

Hi, John Preusner, J.P. Morgan. Thank you very much for taking my questions. Just two, if I may. So the 2025 cooperating profit margin guidance of greater than 30% implies at least a 2.5 percentage point contraction versus what you reported for the H2 results. So can you maybe help us understand the drivers behind this margin contraction, and in particular really what lines are growing ahead of sales in terms of the costs, and maybe how we should be thinking about that in terms of the margin phasing for H125 versus H225? And then just on a second question on Dysport, how should we really be thinking about the shipment phasing that you saw in Q4? Was that just a pull forward of shipments into Q3, which you report is quite strong, or should we expect there to be a catch-up in Q125? And has there been any catch-up so far this quarter and any noticeable shipments? Thank you. Thank you, John.

I'll let Emerick answer those two questions. Yeah, so if you jump to the question. So your first question regarding the margin, maybe before getting into the half by half, overall reminding why we see that the margin is going to be lower this year as compared to 2024. As you've seen on our top line guidance, the first driver is clearly, we see much more erosion from somatinine in 2025, and I think David provided some detail just on the previous questions. And as you know, somatinine will have a direct impact to our profitability. On top of that, we're going to continue to invest from a cost base in R&D. Our guidance includes some potential early to mid-stage transactions that we envisage to complete in 2025, and this is included in our guidance as we did last year. On the HGMA, we continue to manage our cost base, but we want to make sure that we invest both to support the ongoing launches, especially in the U.S., but also in Europe, but also that we are preparing for the future launches should the milestones be positive in the coming two years. And you've seen from Christian that there's quite a number of exciting milestones. Regarding H1 to H2, yes, you should anticipate that the margin will be, as it is always historically, higher in H1 because there is a cadence of costs which are always lower in H1. On top of that, in the deal we do, we have more impact in R&D toward H2, and very importantly, because the cadence of generic H1 impacting somatoline, where we will have a much higher baseline in H2, will clearly impact the profitability. So we should expect that H2 will have a lower margin. Having said that, we should benefit also of the increasing contribution of the launch of our ozone and somatoline products to maintain a good level of profitability in H2. So that's your first question. And the second question regarding discourse, I just wanted to remind you that there is always a difference between, especially I think your question is really focused on the aesthetic sense, where we had a 10% decline in Q4, while the therapeutic sense are quite well balanced quarter by quarter. So I think the inventory or shipment impact is mainly on the aesthetic and is primarily related to Galderma. As you remember, historically, we always have a lot of fluctuation between what are our X factory sales and the in-market demand from Galderma. I think we have a very strong Q3 versus Galderma. We have a soft Q4, and Galderma will publish their quarter later on. This was the same since the beginning of the year, so you should be prepared for that type of fluctuation. Your question about the underlying demand remains very strong. I think, David, you are talking about some shortness in the U.S. market. It is a limited impact, so we continue to be very confident in the ability for this part in Esthetic and through our partner and also directly for Ipsen to continue with the robust goals in 2025.

Okay, thank you.

Thank you. The next question is from the line of Simon Baker, Redburn Atlantic. Please go ahead.

Thank you for taking my questions. Two of them, please. Firstly, on iQURVO, which was a strong performance in the quarter, I wonder if you could just give us some color on how the launch is going in terms of what the typical patient and prescriber looks like at this, albeit early stage, and how the competitive dynamics are evolving in the category given that Gilead has launched as well. And then secondly, on onovidin in first-line pancreatic, Give us an idea of where market share stands at the moment and also how big the community setting opportunities that you alluded to in the slides. Thanks so much.

Thank you, Simon. So on iProvo, you know, our launch is going according to our expectations. We see in terms of patient profile that the large majority is coming from de novo second-line patients. Of course, also some switches are happening now from Ocaliba because you have seen the FDA tightening of the label. In terms of the prescribers, we see very good feedback from our prescriber base. Of course, now Gilead is also in the market. It's a competitor not to be underestimated, but we have been successful also in other settings where we have had large companies being established there. So we will have to see over the next quarters. We have, in fact, Increased our field force size now as of January, and I was also very pleased that we have reported that the ASLD, the data on fatigue, which is affecting 80% of patients with PDC, and I think that's an important data point going forward. To your second question on the performance of Onivite, so we see 32% of the large academic centers now using Onivite, and we see continued growth. Of course, it's going to take time. The sales increase that we're seeing is basically exclusively coming from the first-line setting. In terms of the academic versus community size, it's about 50-50. in terms of patient growth. Thank you, Simon. Next question.

Thank you. Next question is from the line of Sachin Jain from Bank of America. Go ahead.

Sachin, sorry, we cannot hear you. You come across completely scrambled. Is that any better?

Yes, no, it's better. Yeah, thank you. Apologies for that. So just two follow-on questions. So on the margin commentary, is the 2H margin a proxy for how we should think about 26? I understand that 2H is typically lower in the R&D commentary, but it will be the first half that we see the full supernatural impacts of any color on how we think about that going forward. And then technically, just to follow on to the Curvo, obviously the launch is going well, but any commentary relative to consensus forecast, will they sit for 25 and 26?

Thank you. Okay, so Margie and Aymerick, you want to take that?

Yes, Sachin, thank you for the follow-up questions. I'm not going to give the guidance by half. I think your number is very low, so we're not anticipating that. Clearly, there will be some phasing of costs, and this will depend on how many deals we're going to do when during the year. But remember that we are expecting also, and this is maybe some of your second questions about the IQRO or the other products that are going to contribute more and more quarter by quarter, and the baseline, especially for IQRO, is pretty low. So we anticipate that there will be a difference of margin between the two, but the second act is going to be still a good level of margin. Remember that the guidance is to be above 30%, so we're not saying it will be at 30%. And remember that our mid-term outlook for margarine is really to be at least at 32% by 2027. So we are pretty consistent that we're going to be able to overcome the erosion of somatine that we see accelerating this year and which will continue to accelerate in the coming years.

Regarding your second question, Sachin, on Iqbal and the consensus comment 25 and 26, I mean, as you know, we're not commenting on the consensus figures. What I can say is that we see a growing market. We anticipate that the market is going to expand further because there is also trials ongoing in the below 1.67 segment. So we are not changing our peak guidance that we have given for the drug, but I really can't comment on the consensus figures because we have never done this and we are not going to do it. Thank you. Next question.

Thank you. We'll take our next question. This is from the line of Florence Desped from Bernstein. Please go ahead.

Good afternoon. Thank you very much for taking my questions. Two quick ones, please. First, a follow-up question on this port. If you could give us a little bit more color on the sub-segments where maybe you see some opportunities and on some other segments if there is any challenges and how you believe you will boost this port. business with the long-acting products you have currently under development with trial regard this year. Those are my first question. Second question is more about M&A. As Emric said, you no longer have any debt with a quite significant firepower. Could you maybe give us a little bit more call on how you see some opportunities and if you see more opportunities these days because you have, in our guidance, already early costs for the rest of the year of doing some potential acquisitions. Thank you.

Thank you, Florent. On your first question regarding this board and the opportunities in which segments and the long-acting neurotoxin, as you might have seen on our slide that Christelle presented on the long-acting neurotoxin, we are developing... the long-acting in the aesthetic segment, but also in the therapeutic segment, as we have started the Phase II trials already in autolymph specificity as well as in migraine. But we can take, obviously, that drug into many, many other indications where in the past, perhaps, we have them underexploited with this board. We're catching up on the migraine part. But the long-acting can really open up also many other indications that we are actively screening right now. So clearly the profile of the drug is to have a truly longer-acting neurotoxin. We have tried, like other companies, to change the formulations, but what we have seen in the preclinic is that doesn't really do the trick to significantly push the duration of action, so this is why we have done this recombinantly engineered botulinum A and B, because there are more receptors on the neurons also on bond B, so the integration into the neurons is happening better, and What we have seen on the early data so far, but we are waiting for the talk, is that indeed we are getting a very different profile. So we are pleased with that, and we think this could, if it works well, and we have to wait for the data, but if it works well and it's confirmed, it could open up really significantly a market because the patient's experience is going to be totally different. because they have to get much less injections. And for the healthcare system, it's also advantageous because actually the patient needs to go back much less frequently to see the physician. So that's an opportunity. On M&A, I will hand over to Emmerich.

I mean, M&A, first, as you see, we have a firepower of $2.3 billion today. We are not including in our guidance anything related to late stage. It doesn't mean that we're not interested to do deals both early mid and also later stage. You've seen what we've done. in 2024, and I think that we are looking at the same type of opportunity, continue on early need, which I'm including in our guidance, but also be able to take any opportunity in the later stage of commercial assets and using the majority of those final programs for this type of transactions. Thank you, Florent. Operator, next question.

Thank you. Next question is from the line of Sian Hammer from Jefferies. Please go ahead.

Hi, thank you. Just two from me, please. So I've been having pretty negative comments.

Sian, can you get closer to the mic, please? We can hardly hear you.

Yep. Can you hear me?

It's a bit better.

So, I was saying, Advi had pretty negative commentary on the 2024 call regarding the aesthetics market in the U.S., and it seems as though Galderma, and by extension Ipsen, has been somewhat immune to this. Could you give us some more insight as to why this is, and perhaps the expectations for the U.S. market going forward? And then secondly, what are your expectations for Okurbo's growth trajectory this year, and how should we be thinking about this in terms of the competitive dynamics with Liv Delsey? Thank you.

Sorry, can you repeat your second question regarding Liv Delsey?

Because you jumped from aesthetics market to Liv Delsey. And what was your question on Liv Delsey?

Yeah, sorry. So what are your expectations for Curbo's growth trajectory this year? And how should that compare to Gilead's Liv Delsey? Thank you.

Okay, so on your first question, Abby has commented quite significantly on the softening of the U.S. market. However... We actually think it's a mix, this story, and the IV performance, because what we are observing is a slight softening on the U.S. market, yet our partner in the U.S., Caldera, is gaining market share. So I think there are two different underlying dynamics, and it's not all the softening of the U.S. market. In fact... Our forecast is that the trajectory of the longer term of the aesthetic market is going to continue to grow because there are still many customers starting to get into aesthetic treatments. So that trend, we believe, is going to continue, albeit perhaps not at the exact same speed as it was in the last, let's say, five years, because there was a bit of a Zoom effect, if you want. But it's going to continue to have attractive growth. Of course, there are some newcomers into the setting as well. But I think those two dynamics are still making that market very attractive in the long term. Then on your question on growth trajectory with Delphi, I think that's a question you need to ask to Gilead. I can only say we are sticking to the guidance on the pixels that we have given you in the past. And we are, you know, pleased with the uptake that we are seeing right now. As I said, we are also presenting new data at ASLD. So, you know, more to come. Thank you, Sean. We'll answer the next question.

Thank you. Next question is from the line of Richard Parks from BNP Paribas. Please go ahead.

Thanks for taking my questions and apologies if there's some repetition because I dropped off briefly so I might be asking something someone's already asked. I'm just wondering from the proof of concept study in aesthetics this year what visibility you'll get on the LAMP profile and how that might inform pivotal studies and what other work you might need to do and then Also just reminders of what the situation is with Galderma in terms of that programme and when you might be in a position to make a decision on future athletics plans in terms of pivotal development. And then just on the margin discussion, are you able to give us a view on a mid-term R&D where you expect to see that as a percentage of sales? You reached 20% this year. I don't know whether you're... inclusion of additional transactions means we should see another step up from that 20% or are you just thinking about that growing kind of in line with sales thank you

So let Chris answer to your first question on the proof of concept on the land. I will take the second one on Goldorma and also perhaps your question on arbitration. What is the link here and what's going to happen then on land in aesthetics? And then also the third one on the margin and the midterm R&D is going to be answered by Emmerich. So over to you, Chris.

Thank you David. Thank you for the question. So this is a very important readout for us. Our Lant AB recombinant toxin is in proof of concept study. What we can expect from this readout is proof of efficacy, the safety profile, and truly the long-acting nature that we have already seen in preclinical study. These data coming later on this year, will inform our phase three strategy. But we will have, for the first time in the clinic, the demonstration of the properties we have engineered in this Lant AB toxin. Thank you for the question.

On your second question, Richard, regarding the Galberma collaboration and what is the impact then going to be on the long-acting neurotoxin in aesthetics, as you know, we have given notice to Galberma that we are terminating the research and development collaboration on this. They have a different view and they took us to arbitration. That process is ongoing, and we believe the arbitration is probably going to rule towards the end of the year. So we can tell you more by that point. So for the moment, I can't give more comments as this is ongoing. And so I hand over to Emrik regarding the margin and the midterm R&D spend.

Yes, so Richard, regarding your question on the R&D, as we said at the Capital Market Day in December 2023, the objective is to be at least at the 20% of sales in R&D, which means that, yes, this is the beginning this year. You should not expect that ratio to grow very significantly. maybe depending on the timing and phasing, a couple of points maximum. This will be a combination of our existing pipeline, but remember that we are quite a member of Phase 3 that will read out this year and even more in 2026, so that will reduce our existing pipeline. And this will be complemented with all our external innovation strategy, adding more early mid-stage assets, which will make these investments. And that's part of our commitment to exceed 32% margin by 2027.

Thank you, Richard. Could I take one further question, if that's all right? I just wondered if you could discuss the reasons for the Sohonus downgrade and how that impacts your expectations for Citrus RTib. Thank you.

So maybe first I can talk about the Zohonos impairment, and then I will let David answer maybe on Fidric-30. Zohonos is purely that we don't reach the expected pixels. You remember we are talking about 100 million, that was our pixel expectation. Today, unfortunately, and you've seen the quarterly numbers on Zohonos, we are not there. Most of the patients are mostly on clinical trials. and the risk-benefit of the drug is not proven here in the U.S., and we have very limited access outside the U.S. So by revising our pixels, we have to take this accounting impairment under IFRS, which explains the $218 million loss that we book in our 2024 financial accounts. We're going to continue to be in the FOP market, and maybe, David, you want to elaborate on

Yeah, fiducertib has a different mechanism of action. You remember Sonos had the futility analysis and the premature growth table closure, so got a pretty restricted label. That is not going to be the case on fiducertib, so we're waiting for the re-dive. That trial has included much younger patients as of the age of 5. So it is going to have a different profile and should not have the, let's say, the side effects that Sohonus has shown. So, of course, now we have to be patient and wait for the data, and we are looking forward to the unblinding. Thank you, Richard. Thank you. Operator, next question.

Thank you. Next question is from a line of Laura Hindley of Morgan Stanley. Please go ahead.

Hi, Laura Henley from Morgan Stanley. Thanks for taking my question. One on decapeptyl, please. What is giving you the confidence that this drug will return to growth in 2025? And is this based on trends that you're seeing in a particular region? And then one follow-up on the long-acting neurotoxin. Thank you for going through all that detail. It was super helpful. But with that proof-of-concept readout we're getting in H2, can we expect to get a clear indication of the duration of action, for example, six months or nine months? And will we get a read on the improved tolerability that you referenced earlier? Thank you.

Thank you, Laura. What gives me the confidence is that, in fact, in 2024, we have seen volume growth in both in China and in Europe. And so you get from time to time price negotiations that you have to take. And so you should then see, again, growth, for example, for Western Europe. In China, the dynamic was slightly different. We had some Chinese competitors coming in with a one-month formulation. We are launching now the three- and six-month formulation, so changing the dynamics of the market that those competitors don't have. a three to six month formulation. So we think we can come back to growth over 2025 and also a longer term. On land, perhaps I pass the question to Christelle regarding the duration of action, six or nine months. What will we see from the POC and what is also going to be the data we will have on solubility?

Thank you, Rick, and thank you for the question. So our proof of concept is designed and powered to measure a longer duration of action, so we will have this readout later on, and that includes the six-month endpoint. And on tolerability, you will remember that we have included higher doses in this proof of concept because we'd already seen signs of really good tolerability. So we eagerly await the unblinding of that study, and we should have all of the data we need to shape our phase three development program later on this year, and I look forward to sharing that data at a later date.

Thank you, Christelle. I think that's our last question, and this concludes our conference. Thank you very much for attending, and back over to you, Operator.

Thank you very much. This concludes today's conference call. Thank you for participating, and you may now disconnect.