Orion Corp New B Shs

Good evening and welcome to the webcast of Orion. Today's topic is the half-year review of Orion. My name is Tuukka Hirvonen and I will answer the investor relations. Director Liisa Hurme will start the event by telling us about the results of the survey and the most important events during and after it. After that, you have the opportunity to ask questions to both Liisa and our current CEO René Lindell. The official language of this event is English, but questions can be sent to us in Finnish through the phone conference as well as via the text field under the webcast. In addition, later this afternoon, Liisa Hurme's Finnish interview will be available on Orion's website. Good afternoon, ladies and gentlemen, and welcome to follow Orion's webcast and listen to teleconference, where today we have the topic of our half year financial report for 2024, which we just a couple of hours ago published. My name is Tuukka Hirvonen. I'm the head of IR here at Orion. In a few moments, our CEO, Liisa Hurme, will go through the key events and main topics of the reported period, after which you will have the possibility to ask questions either from her or from our CFO, Mr. René Lindell. We will be first taking questions through the conference call lines, after which then we will turn to the webcast where you have the possibility to type in your questions using the chat box function in the webcast. And those who are presenting the questions through the teleconference lines, we kindly ask you to state your name and the organization you are representing before asking your question. And as usually, I'd like to draw your attention to this disclaimer regarding forward-looking statements. And with that, I will conclude and hand over to Liisa.

Thank you, Tuukka. And very good afternoon to all of you, or very good morning, wherever you find yourselves. And welcome to Orion half-year webcast. Let's start with Q2. Our Q2 was very strong, both on net sales and operating profit. Our net sales grew 13% or 13.4% to be exact, and our operating profit grew 41.5%. The net sales growth was driven mainly by Nubeka royalties and product sales, and also good performance of our animal health portfolio. Also, our operating margin increased from 16.1 to 20.1. And a few words about the operating profit still. Of course, Nubeka was there, the biggest driver with the royalties and product sales. And of course, it's great to present such a good improvement on operating profit. It is exactly according to our financial objectives. As we've stated, we are increasing our R&D investments, and that's what we've done. And we can still show growth in our operating profit. Now let's move to the half year figures and events. Similar trend here, net sales 12.2%, Nubeka, Easyhaler and Animal Health main drivers. Operating profit plus 19.5% and here Nubeka again as the main driver. And same here with the half year numbers that with the higher R&D investment, we still can show a very good profitability and increase in our operating profit. cash flow clearly improved from the previous year. And this is due to the Orion Pension Fund B transfer and also the Nubeca sales milestone of 30 million that were actually in our cash only this year, even though they were booked to the previous year. And Nubeca royalties and product sales, of course, have a positive impact on cash flow as well. When we look closer to the net sales, it's Nubeka here in the column two with 38.1 million euros during the first half year. But when you calculate together All the other products, easy hailer, the other portfolio, including generics and also animal health and fermion, those together are almost or are as high as Nubeca alone, which means that all the divisions are contributing to Orion's growth. On the negative side, the usual suspects, Dextor and Simdax prices are declining and to somewhat also volumes. And also Entacapone sales are declining due to price erosion. Volumes are still growing. On the operating profit, we can see the positive product sales without the sales margin or product mix in the first column here, 32.6 million. And then the effect of the product mix and the margin. And this column then includes, for example, Simdax and Dextor, Entacapo price erosion. Then royalties, 29.2 million. And the last column here, fixed cost, tells the story of increased R&D investment. Of course, this 24.2 million also includes other costs on R&D. Another big item being IM costs and our ERP program that we are right now doing. Now I move to the divisions and I start with innovative medicines, a very healthy growth driven by Nubeqa. Nubeqa sales were 121.1 million and the remainder of the division's revenues is product sales for research purposes, different type of products, of course also Nubeqa. And we are still going through pricing and reimbursement negotiations regarding STALMI in the major European countries. Brandy products here also very nice growth figure of 11.3%. And Easyhaler, the biggest product, driving the growth. Demand is very strong at the market, partly due to the green wave that we can answer, but also partly due to the general increase although slow increase, but increase on the market. Entacapone, I already mentioned, decreasing to some degree, but a very nice growth for women's health, although it's a smaller business. We have also other products in branded division. There are some smaller CNS products and also some products for the asthma and COPD, and those are also growing. This supports our strategy and I hope we'll see bigger figures as we go along during the next years, because we are building the Parkinson's disease product portfolio around Entacapone products. On that note, we have signed a license agreement with Navamedic, a Norwegian company, on a dispersible water-soluble micro-tablets of levodopa and carpidopa for treatment of Parkinson's disease in later stages. So this is just an example of one product that we as an example of increasing the number of Parkinson's disease drugs in our portfolio. Now, generics and consumer health, almost on par with last year, minus 1.2%. Of course, here, as I often say, if you exclude Dextor and Simdax, especially Russia, last year we sold remaining inventories in Russia. So that of course creates some difference in comparison to this half year of generics and consumer health. So basic generic portfolio is experiencing and showing very healthy growth with single digit percentages. And here we can see that Finland is the single biggest market for our generic and consumer health products. Animal health, very nice growth, and also fermion's external cells are growing, although fermion's capacity is very much tied to manufacturing of increasing volumes of darolutamide for Nubeka. Here is our top 10 list. Same stories here. We have the Nubeca with 46.9% growth. Easyhaler product folio with 19% growth compared to the previous year's first half. Entacapone products, a slight decline due to the price erosion in different countries around the globe. And here I also want to underline that the use of Staliivo and Komtan Komtes is actually increasing by volume. Our sedative portfolio plus 46.7%, also Divina Series, almost 17% growth. Burana more or less on par with the previous year, Simdax, Dextro we already discussed. The last two products are mainly partner sales, so they may change actually quite a lot between different quarters and between different years, depending on the deliveries to our partners. We have had a busy summer with some news and I'll go through those now in my next session or section of this presentation. We have reported that we and MSD have exercised option regarding Opevesastat for treatment of prostate cancer, so that the co-development and co-commercialization agreement with MSD was converted into a license agreement. which means that Merck has now rights for Opevesostat globally. And this license agreement then provides Orion with a nice milestone package of 1,630,000,000 euros. The package is divided into three segments. There are the development milestone payments, approval and regulatory milestone payments, and then sales milestone payments. In addition to milestones, Orion is entitled to low double digit to low teens of royalties. Of course, in a similar way as with Nubeka, to reach the highest level, I mean, in this case, the low 20s of royalties, the product would need to reach several billion of market sales. That's good to keep in mind. And Orion continues to supply the product to Merck as earlier. And in the context of converting this co-development and co-commercialization agreement to an exclusive license agreement to Merck, we also released a 60 million item from our balance sheet. And this will create a positive impact on our quarter three operating profit. And due to this, we upgraded our outlook for the year 2024. So this ongoing year on 1st of July. To that outlook, of course, there were some other reasons, and I'll get back to that in the end of the presentation when we discuss the outlook. The other event after the first or the second quarter was the reporting of phase three Aranaut study of Nubeka. The study showed or met the primary endpoint of progression or the radiological progression free survival. That was the primary endpoint. we compared this Nubeqa with androgen deprivation therapy to placebo and androgen deprivation therapy. This phase three study also confirmed or reconfirmed again the safety and tolerability of Nubeqa. We've seen the same safety and tolerability profile in the earlier studies of Aramis and Aracens. Bayer plans to present this pivotal data in the forthcoming scientific congresses. And also Bayer plans and prepares to file or submit to the health authorities globally an expansion to the current indications based on these results of Aronaut. Otherwise, our pipeline remains the same. Regarding ODM111, we have completed phase one studies and we are in the process of preparing to start phase two program. including acute pain and two different types of chronic pain. The program is a global one and has several indications, and we aim to start this by the end of 24, early 25. Now to a very different subject, and this is sustainability. Orion has 6000 suppliers in 60 different countries around the globe. for many different, for drugs, for medicines, for APIs, for raw materials, for different parts of our manufacturing lines, you name it. And of course, having such a wide network of suppliers is something that you need to manage carefully. And we've worked consistently over decades to create an extremely solid, visible and transparent process of managing our suppliers. This has to do with the sustainability. We demand, of course, the code of conduct of our suppliers. We have included the scope three carbon emissions into these collaborations. And most of all, it requires good collaboration with your suppliers. And many of our suppliers are our partners for a long time and very crucial ones for a mid-sized European company operating in many different segments like generics, innovative medicines and branded products. And most of all, we've been recognized, as you can see on this slide, by many operators in the sustainability field that our work in the sustainability regarding managing the supply chains is on an excellent level. Now to outlook of this year. This was updated on 1st of July, as already mentioned, and the update was mainly due to the 60 million item that we released from the balance sheet. But that was not the only reason. Also, the beginning of the year has been better than we expected or estimated when we started out this year. So that's clearly another reason for this update. And of course, reporting these half-year results show that as well. So now our target for the outlook for 2024 is 1 billion 440 euros to 1 billion 480 billion euros. And then for the operating profit is 350 to 380 million euros. You can see the upcoming events here listed. We will report next time on 29th of October. And then we report the third quarter and first nine months of this year. And the financial statement of the ongoing year will be on 25th of February. I thank you for your attendance.

Thank you, Liisa. for the presentation, and it's my pleasure to invite also René to the podium, and we'll turn to the Q&A session. And as mentioned, we will start with the conference call line. So at this stage, I will hand over to the teleconference operator, please.