Orion Corp New B Shs

Hello from sunny Helsinki and welcome to Orion's Q2 2025 earnings conference call and webcast. My name is Tuukka Hirvonen and I'm the head of investor relations here at Orion. In a few moments, our CEO and president, Liisa Hurme, will present the results and key events from the past quarter, followed by the opportunity to ask questions from Liisa and also from our CFO, René Lindell, who is here today also. We will start taking questions first from the conference call lines and then afterwards we will turn to the webcast. So you all have the opportunity to type in your questions using the chat function of the webcast. Kindly state your name and the organization you are representing before asking your question. And also to be noted that recording of this webcast will be available on Orion's website later this afternoon. And also to our Finnish speaking viewers information that also a Finnish interview of the CEO Liisa Hurme will also be available on Orion's website later this afternoon. But without any further delays, I'd like to draw your attention to this familiar disclaimer or safe harbor statement before letting Liisa to take over. Liisa, please.

Thank you, Tuukka. And welcome on my behalf as well. I start with saying that all Orion's divisions continued very good performance during the first quarter this year. But before I go to numbers, let's look at some highlights from the second quarter. FDA gave approval and CHMP recommended for approval in EU darolutamide in combination with ADT, androgen deprivation therapy, or the use of darolutamide and ADT in patients with metastatic hormone-sensitive prostate cancer. Our partner MSD has shared information that they have expanded Opevesostat program to women's cancers. And also we shared information in our capital markets day that our first, Orion's first biologics will enter clinical stage during the next 12 to 24 months. We've also broadened our research pipeline by exercising options with a company called Klaigos. to use their antibody drug conjugates, next generation ADCs, for development of products for cancer. Also, we've made an agreement with a company called Shilpa for recombinant albumin, and with a company called Criseto for apomorphine, oral mucosal apomorphine for treatments of Parkinson's disease patients. And we've also updated potential of Easy Halo portfolio to be exceeding 300 million in annual sales. Now, first, let's start with the Q2. Our net sales grew 27% and totaled to 416.5 million. Operating profit grew 59%. with operating profit margin of 25%. And operating cash flow per share increased almost 200% to 0.57 euro cents per share. I will come back to that later on. When we look at the net sales development in different divisions, it's very self-evident and clear that the biggest growth comes from innovative medicines and from Nubeca sales and royalties from Nubeca sales and also product deliveries to Bayer. However, all the other major divisions are also performing well. We see here brandy products with 9.4 million growth, generics growing 8.5 million and animal health 6.9 million. A fermion was slightly lower sales than in the previous year's quarter too, mainly due to the some capacity constraints. And then looking at the operating profit, pretty much the same message here. Royalties contributing to almost 46 million and Increase in sales volumes, 30.1 million. And change in prices, cost of goods and product mix, we can see, minus 14.5 million. And this comes, of course, mainly from the Simdex and Dexter, which are losing, where the prices are still decreasing due to the generic competition. And I would like to draw your attention to the fixed cost, which is 22 million. And this is all planned. We have clearly stated that we are investing more in our research and development and sales and marketing. So this is all according to our plans. Now I move on to the first half of 2025. Again, more than 20% growth in net sales, ending up to 771 million, 100 million. And then operating profit growing almost 50%, ending up to 182.5 million. And operating cash flow here, when we look at the first half of the year, is more leveled out compared to the second quarter and ends up with 1.12 euro cents per share. And now I move on to different divisions. And here you can clearly see the innovative medicines. We have slightly changed the way we show the data here on slides so we can see the second quarter, always the quarterly results, and then a year to date. So here we can see the first half of the year. So the growth both on a quarterly level and on a half year level is around 80%. And on the right side picture with several columns showing the quarterly sales or the quarterly royalties we are receiving from Bayer and also the product deliveries, product sales to Bayer, we see clearly the back-end loaded dynamics of a year of Nubeca to Orion. And already we see again at all time high product sales to Bayer. And branded products keeps on going with a steady more than 10% growth. Growth in quarter two compared to the previous year's quarter two was healthy 13%, and even during the first half year, more than 10%. The driver of growth here is clearly Iisiheilö portfolio, and within that portfolio, Budesonide Formaterol combination product. And CNS sales here in a lighter blue is growing due to the repatriation of Stalivarites in Japan. But also there are some new minor products that we are launching or smaller products that we are launching across Europe currently to our CNS platform. And the latest in licensing agreement, as I already mentioned, was for Aporon, a novel apomorphine oral mucosal spray, which treats the off episodes of Parkinson's patients. A very good way to quickly get a treatment to a very difficult situation. and women's health keeps on growing. It's the smallest segment within branded products with the highest growth percentage. Generics and consumer health is really doing good work. We do know that generics market usually grows or the average growth is from four to six percent. And if you look at the second quarter numbers here, the growth was six point seven percent compared to the last year's second quarter. And when we look at the first half of the year, we are almost growing four percent. This is the result of hard work, both with new launches. We have had several new launches across Nordics and Eastern Europe, but also we've been able to provide and service our customers. So we've been able to take a bit of an advantage when other companies haven't had the products available in our regions. Animal health keeps up the good work, growing almost 23%. But here we of course need to remember that the comparison year was very, very tough for animal health. So this is kind of gearing up towards the normal animal health performance. And here, again, growth comes from all segments, from livestock, from companion animals, and many, many different geographies. And this is especially, I'm happy to show this top 10 list if I compare to how it looked like a year ago. Almost all products are on par and most of them are growing. Of course, Nubeca as the first one, Easyhalers, Entacapone products, animal health sedatives, Divina series actually growing second fastest after the Nubeca. Burana more or less on par, and Simdaks and Dextor fighting against the generics and thus decreasing. Also, what we can see here is that the major divisions, innovative medicines and generics and consumer health are getting more and more balanced. Their share of total sales of Orion is approximately 30% for both of them. And then for branded products, it's 20%. Now on our clinical development pipeline. We showed this slide first time at the Capital Markets Day in May, and you can see that we've added two new projects that we are not carrying out by ourselves. One is DASL-HICAP for darolutamide. Bayer is totally responsible for this study for neoadjuvant prostate cancer, but Orion has an option. to jump into the study, if you could put it that way. And then also, of course, receive royalties as a result of this. Then we have Levosimedan, Oral Levosimedan. Our partner Tenax is developing that. SUPIDES is still ongoing. We've had some questions regarding this phase two study, but it's really a study where we are completing the phase study and are responsible for that. This study was initially the one that used the data from this study to design Omaha-1 and Omaha-2a. But it is so that pharmaceutical companies are obliged to carry on studies as long as patients need the drug. All other studies are proceeding as planned. And of course, then I forgot to mention the expansion that I actually talked about in the beginning, expansion of Opevesostat program to women's cancers in phase two. Now to a very different topic, sustainability. We are very happy that science-based targets initiative, or based on the science-based target initiative, our near-term emission reduction targets are in line with the latest science. And we have a twofold strategy here. One is that we are committed to decrease our scope one and two emissions by 70% and by 2030 by 70% using 2023 as a base year. The other commitment is a different one. And there we commit that 78% of our suppliers, which is a huge number actually of suppliers around the globe, are committing to the science-based targets initiative by 2029. So how can we do this? Well, first of all, we have a very, very good track record. Now you can't really see the history except from the year 23, which is a base year here, that we reduced already 21% of emissions during one year to 24. And now there really is a very concrete plan how we will reach that minus 70% by 2030. the biggest source and you can see here the darker blue bulk and the lowest bulk here is really production of steam in our factories and that those processes we are going to be electricity we are going to use electricity there we've used already or done already a lot of work changing to gas and biogas and trying to reduce emissions as much as possible on that part. Of course, other big part is the district heat is just heating your factories and your offices. And there we've done also a lot of work changing to a local heating centers where we use the energy from our factories in our campuses. But there is still a lot to do to change to greener choices in the remaining parts. And of course, the residual part comes from the traffic and cars and car fleet, where we step by step are moving to electric cars and other forms from diesel or benzene cars. And we updated our outlook on July 9th. And you can see here the numbers, the updated numbers, no change to those in this session. We say that we will reach net sales of 1.630 billion, from 1.630 billion to 1.730 billion. and for operating profit from 400 to 500 million. And here are some upcoming events. Next time when we will be reporting quarter three, it will be October 28th. And then in February, we will report our financial statement. And I think I'm all done with this presentation. And I guess it's time that Rene and Tuukka will join me here.

Yes. Thank you, Liisa, for the presentation and remarks. As stated in the beginning of the webcast, we will first take questions from the conference call line. So at this point, I would like to hand over to the operator.