Orion Corp New B Shs

Good evening and welcome to the ORION's revenue announcement event from the review period of December-September 2024. That is, we will go through the whole year's income today. My name is Tuukka Hirvonen and I will answer the investor relations at ORION. A moment of silence. The CEO Liisa Hurme will go through the results of last year, after which you have the opportunity to ask questions to both her and the CEO René Lindell. Kieli on englanti, mutta kysymyksiä voi halutessaan esittää myös suomeksi. Lisäksi myöhemmin tämän iltapäivän aikana Orionin verkkosivuille tulee julkaistuksi toimitusjohtaja Liisa Hurmeen suomenkielinen haastattelu. Good afternoon, ladies and gentlemen, and welcome to Orion's earnings conference call and webcast for the fiscal year 2024. My name is Tuukka Hirvonen. I'm the head of investor relations here at Orion. As usual, in a few moments, our CEO Liisa Hurme will go through the results, after which you will have the opportunity to ask questions from Liisa and also from our CFO René Lindell. We will be first taking questions from the teleconference lines, after which then we will turn to the questions you can post us through the webcast app. Kindly state your name and the organization you are representing before asking your question. And just before letting Liisa take over, just a brief reminder about the disclaimer and forward-looking statements. But with this, it's my pleasure to hand over to Liisa.

Thank you, Tuukka. And good afternoon on my behalf as well. And welcome to Orion 2024 webcast. 2024 was a busy year for Orion. In the beginning of the year, we refined our strategy and financial targets. During the year, we both have activities with our current partners and some new partners. In July, we converted our collaboration agreement with MSD to a global license to MSD. With Bayer, we got positive readout from phase three of Arano trial. And while I'm on Nubeka, let's not forget that Nubeka became a blockbuster during 2024, exceeding 1 billion euros of sales. to another partner, Alligator Bioscience. There we amended our agreement so that we got the full rights to our bispecific antibodies. Then regarding pain, we also signed an agreement with Abilita to develop antibodies against or towards the NAV1.8 ion channel. We made agreements with Glycos and Invenra to develop new cancer drugs. And we made an agreement to license our digital platform for neurology and pain for them to develop further. Artificial intelligence is very important to Orion. It's a tool. We can do innovations. We can speed up things along our value chain. We have made a deal with a company called Aitia, a US-based company, to speed up our research for cancer drugs. They are a well-known company. They have digital twins and a load of data. from patients all around the world that we can now use for our studies. And one big thing that we achieved actually early this year, I'm also concluding activities and milestones from early this 2025, is that we did the go-live for our new ERP system. That's not the small thing. I think everybody who works in the industry or any industry knows that new ERP implementations can be tricky. But I am happy to report that this project that lasted several years has come to a very happy conclusion and everything is working well. Our drugs from day one were reaching the pharmacies in all countries. Money was going from Orion to Orion and all our operations have been working. So very well done. I'll take this opportunity to thank the whole Orion team who worked with this program. Then on the social side, we were able to validate our near-term emission targets by science-based target initiative. And on the social side, we started collaboration with Save the Children to protect the most vulnerable ones in this world, both in Finland and outside the Finland. There have been several changes in management in my executive team. René Lindell was appointed CFO in 2024 and started 1st of May, and he will join me here later today. Julia Macaray started last February as a Senior Vice President for People and Culture. And the newest appointment is Mr. Mikko Kemppainen, who's been appointed as General Counsel and Secretary to the Board of Directors as of 1st of June this year. And I welcome, of course, all of you and especially Mikko as the latest addition to my group, warmly to join this group. Now, Let's look at the Q4. Q4 was very strong regarding sales on all fronts. We do know that Nubeka clearly drives the growth, but I am happy to tell that all our divisions developed positively. So net sales in Q4 compared to the Q4 in 23 grew 35.3%. Operating profit was at the same level, And here we of course need to remember that when we compare Q4 24 to 23, in 23 we received 30.7 million euros when we transferred our pension fund to a private company. So that of course has an effect on this comparison. And let's remember that we also did two write downs. One for the ODM 1.1 program with 17.5 million euros and the other one when we terminated our collaboration with Marinus. And that write-down was 23.5 million. So this is the comparison period and these write-downs clearly had an effect on our operating profit during the last quarter. But sales developed very well. And cash flow was strong. Almost the same applies except for the operating profit for the full year. During the 2024 our sales grew almost 30% compared to the full year 2023. Again the common drivers Nubeka, Easyhaler and all our divisions. And of course, 130 million of milestones, the other one being Nubeka sales milestone and the other one that we received from MSD when we converted the agreement. And again, these milestones had a big effect on operating profits. So we were able to take the write downs of 41 million and also the increase of costs, both on R&D and sales and marketing. And cash flow looks very strong and grew from the previous year. What I'm extremely happy is that even though milestones are an important part, an integral part of our business, as we do license our product rights and we do collaborations, and I think last year proved that with the 130 million milestones, the underlying business is growing in a healthy way. Almost 22% of growth of underlying business from 2023 and 33% from growth of operating profit from the 23 to 24. We've also seen during 24 and already in 23 that our yearly cycle or financial year is very back-end loaded, mainly due to the Nubeka royalties. the royalties are cumulative on a yearly basis. So we start on a lower royalty rate, which then increases during the year as certain cumulative sales triggers have been reached. And of course, as the Nubeka sales per se grows at the same time, It's really back-end loaded. And last year, of course, the milestones were also received in Q3, which made it even more back-end loaded. On Net Sales Bridge, nice blue colors on almost all of our main products and divisions, with an exception to Enter Capone, where volumes do increase. but prices decrease. And the usual suspects of Simdax and Dextor here in the column one, which are still sliding down due to generic competition. And only operating profit, it's good to note the biggest factors, milestones or the royalties of 147.1 million and then milestones of approximately 100 million. And then the biggest downside is here, the write downs of 41 million. I think this slide of innovative medicines division describes even better the backend loaded year, financial year, because this only shows the innovative medicines. Of course, this goes from the beginning of the, and I'm talking about the right-handed picture of the column picture. It starts from 2023, but even if you look at 2023 and then you look at the 2024, It's so very clear how the royalties increase towards the end of the year with both the percentage and the absolute amount of sales increasing together with the product sales as we produce the product to Bayer. And on the other picture, you can clearly see how milestones have especially high impact on Innovative Medicine's result. Branded products performed very, very well. 10% of growth in branded market is a good achievement. EasyHeilö was clear driver in this portfolio with 15.4% growth. And in EasyHeilö portfolio, it's the Budesonide formaterol combination product with 22% growth that drives that product portfolio of six products. And as I mentioned, Entacapone is suffering on the price decreases around the world, even though the volumes are growing. And Divina series, mainly DiviGel, which is an estrogen gel product for HRT, grew 15%, a very good result. And generics and consumer health with the growth of 2.1% was also an excellent development. Generic business grows in Europe, say from two to 5%, depending on the country, but on average, so we are clearly where we should be. And let's remember that in this portfolio, we have Simdax and Dextor, and in 23, there were also gains from some divestment of brands in Russia. So the comparative period is very challenging and still we were able to create growth here. And if I deduct Simdax and Dextor from this equation, the generic peer portfolio grew almost 6%. And here also last year, we saw a very accelerated growth towards the end of the year, mainly due to the some legislative tax changes in Finland regarding drugs. So there were some busy months towards the end of the year in the pharmacies in Finland. And all key markets performed very well. Animal health bounced back. 23 was very difficult year for animal health, but it has clearly bounced back. Our partner Zoetis is back on track and filling their stocks and we are delivering and also all our own regions are performing well. The only division that's showing a slight decline is Fermion, But let's remember this is only external sales and that fluctuates quite a lot, you know, depending on when we have deliveries to our business to business customers. And there has also been some capacity constraints due to internal manufacturing of internal APIs. Top 10 slide clearly shows the same story. Maybe in addition to the previous ones, I could add the number 9 and 10, which is Fareston and Treksan, the old timers, old but very good treatments, which we mainly sell to partners all over the world. So these might fluctuate from plus to minus with rather big numbers, even from one quarter to another one, depending on when we have deliveries to our partners. It's good to also note that the balance between divisions has increased. It has not changed dramatically, but there is clearly a change going forward, so that Innovative Medicines is now 34% of our revenue. If I remember correctly, last year at this time it was around 20%. So clearly Orion is becoming more and more innovative company. And the generics are also 34% and branded products 19% of the whole revenue. Our clinical pipeline has the two Nubeka studies or darolutamide studies, Aranaut and Arastep. These are phase three studies, Aranaut being in a registration phase, and two phase three studies for Opevesastat, Omaha-1 and Omaha-2a, and Sypedes also with Opevesastat. It's a phase two study that is a continuation from the previous phase two study, which we used to go and start the phase three studies that I mentioned. On cancer therapy area, we have ODM212, which is a TID inhibitor and target is solid tumors. It's in phase one and we are currently expanding the phase one study to do more extensive dose valuation based on the FDA's recent new guidances from the end of the last year. So we will continue the phase one study for a while to work according to those guidances. And then tasipimidine, ODM105, which is targeted to insomnia, to treat insomnia. Also there we are recruiting more patients and transferring from a kind of a classical phase to A, which are usually very small studies where you just show and try to see the proof of concept for your patients. for your theory. So now we are expanding the patient population to a normal phase two study. And the reports of the board of directors, financial statements, sustainability statement, corporate governance statement and remuneration report 424 will be published at latest in week 11. And now to the outlook for 2025. Outlook for net sales ranges from 1,550,000,000 to 1,650,000,000. And outlook for operating profit ranges from 350 to 450 million. The basis for this outlook is of course growth of Nubeka. That's the most single and significant variable in our net sales range. And here you can see in this slide how we estimate actually the underlying net sales and how the ranges are estimated to develop. And when we think that what are the factors that would have the biggest effect on our operating profit and how that will eventually develop, of course, Nubeca is one of the biggest items. Another one is timing of R&D costs. Some programs do go faster, some go maybe slower, so we never know at this time of the year how the R&D course will actually eventually be towards the end of the year. And now maybe this is after many years that we need to mention even the currency. So here the US dollar might have also a significant effect on the operating profit. And we don't include any major milestones in our outlook for 2025. and save the date. We will host Capital Markets Day on 22nd of May in Helsinki. We will share more light and elaborate our businesses and their future, also our R&D. But this is not bound to any specific event within the company. It's really more to share information with our investors and markets. And here you can find all the other upcoming events and dates for those. I thank you for your attention at this point. And we welcome the questions to me and René will join me here on the stage. And Tuukka, of course.

Thank you, Lisa. Now we could immediately hand over to the operator to see whether there are any questions on the teleconference line. So please go ahead, operator.