Orion Corp New B Shs

Good afternoon and welcome to Orion's earnings conference call and webcast for the financial period of January-September 2025. My name is Tuukka Hirmonen. I'm the head of investor relations here at Orion. In a few moments, we will start with the presentation by our CEO and president, Mrs. Liisa Hurme. After which then we will have Q&A session where you can pose questions both to Liisa and also to our CFO René Lindell. We will be first taking questions from the conference call lines and after that we will turn to the webcast questions so you can type in your questions using the chat box in the webcast view in the bottom. And just before I let Liisa to take the stage, I'd like to draw your attention to this disclaimer regarding forward-looking statements. But with that, it's my pleasure to hand over to Liisa. Liisa.

Thank you, Tuukka. And welcome to Orion Q3 webcast on my behalf as well. Here are some highlights from Q3 2025. Nubeca received approval from the European Commission for use of darolutamide and ADT, androgen deprivation therapy, in patients with metastatic hormone sensitive prostate cancer. Nubeca also reached all-time high royalties and product deliveries to Bayer during Q3. Generics and consumer health business had a strong quarter, supported by good availability of products in our major markets and very successful new launches. Unfortunately, ODI 105, Tasipimidine, phase 2 trial for insomnia didn't reach its efficacy target. And we decided to discontinue the development of that program. And Q3 financials are here. And before I go here deeper into the financials, it is good to remember that the comparative period Q3 2024 was an exceptional quarter. We received 130 million worth of milestones last year's Q3. There was a 70 million sales milestone from Bayer related to Nubeka and 60 million milestone related to the MSD agreement on Opebesestad. So these are quite difficult to compare to each other. And now as I go along, I will talk about the base business. So the business without the milestones. The base business growth was 24% from quarter three, 24 to this year's quarter three, totaling to 423 million. The operating profit growth was even stronger, 68%, up to 121 million euros. And our cash flow grew 15% and was being very solid. Of course, during last year's Q3, the milestones were booked, but yet net growth yet not paid, so they were not yet cash in our bank. And when we look closer, the net sales bridge, we can see the kind of a net effect of the difference between the quarters here regarding the milestones in innovative medicines column, which is 59 million. But underlying net sales increased by 71 million. So I think the growth, as I earlier said, of Nubeka product sales and royalties was very strong, but it didn't fully compensate the previous year's milestones. We can also see here that all other divisions developed positively. Strongest being generics and consumer health, but also branded products and animal health showed positive development. And fermion was more or less on par. And here on the operating profit bridge, we can see the full kind of a full effect of the last year's milestones, 130 million euros, but also the positives on the change in sales volume and change in prices and cost of goods and product mix of almost 20 million. And then the royalties of 50 million. We can also see that our fixed cost increased as well, but this is all planned. It's mainly R&D and sales and marketing costs here. Now let's take a view for the first nine months from January to September. Again, a very nice 22% growth during the first nine months and 7.8% growth, even though we would compare to the previous year's quarter three, including the milestones. And the first three months ended up with 1.2 billion of net sales. Regarding operating profit, 57% growth and slight decrease if we compare to the numbers, including milestones in previous year. And again, a very positive development on cash flow during the first nine months. Now to innovative medicines. This is a bit different picture than you used to see. There is the shaded area, which tries to tell you the comparison between the quarters, including everything else but the milestones from the previous year. And 71% of growth is very healthy for innovative medicines, and also almost 75% growth during the first nine months. And on the right side here, you can see this all time high royalties plus product deliveries ending up to 166 million. And I always remind looking at this picture, the very, how would I say, year is very late ended, loaded, back ended, loaded. back-end loaded for Nubeka, as you can see here, when you look at the 24 from the first quarter to the last quarter, but here as well. But I would like to remind that in comparison to 24, we already reached the higher royalty rate in the previous quarter with Nubeka. So we are not going to see a similar shift and change in the royalty rate as we saw last year between the Q3 and Q4. Branded products growth during Q3 was somewhat slow, it was 3%, and this slowness in the growth is mainly due to timing of deliveries to our Stalivo partners. And that will be fixed during the rest of the year. So it's kind of a temporary change here. And the growth for the first nine months is a healthy 9%. And in Easy Halo portfolio, Budesonite Formoterol combination product was the clear driver for the growth. And then on the CNS portfolio, Stalivo Japan contributed to growth in branded products. And as I say, generics and consumer health quarter three was very, very strong. 5.4% growth is extremely good for any generic business, but especially here when we remember that Simdax and Dextor are included in this business and they are constantly sliding down facing the generic competition. So we are able to compensate that decrease. and at the same time, increase and grow our sales. And the reason for good quarter is really the good availability of the products in our Nordic countries. The service level is the thing in the generic business. You need to have the products at the time of the tender where they should be, and you would need to be able to deliver also for all the different countries in the specific timings of tenders or pricing processes. And also we had a good launch, for example, for Apaxiban in Finland. Animal health continued the good growth trend, although here we see a bit of a similar slowdown as with branded products. And that partly has to do with deliveries as well. But when we look at the first nine months, it's a very strong two digit number growth. And our top 10 product list is, as it has been, Nubeca, there as a flagship with 83 or 84% growth. Easyheiler product portfolio growth was close to 8% and Entacapone products grew close to 5%, mainly due to the Japan sales. And our HRT product Divina performed very well here on the row five, growing almost 23%, continuing the strong growth from earlier this year. And some oldies like Trexan even 10%, close to 10% growth, and Ketiapiin products 10% growth. And currently, our business divisions are very healthy. The balance between business divisions is very healthy. Approximately 30% for innovative medicines and generics and close to 20% for branded products. Now, Orion's key clinical development pipeline has clearly been become oncology-focused, as we decided to discontinue the ODM105 project for treatment of insomnia. We have also removed Aranote from this list, as it's approved both in US and EU. So we now have the DASL-HICAP study on this list. And then the two Omaha studies with Opevesostat that MSD is responsible for. It's good to mention here for these two Opevesostat studies that their design or primary endpoints have changed since we last presented this so that for the Omaha 3, which is for the later line patients, the primary endpoint is now overall survival. So the progression-free survival has been demoted and overall survival is the primary endpoint. Also, there are changes for the frontline patients study 004, so that the progression-free survival is now a primary endpoint for this study. And these are changes that our partner MSD has done, and it looks in all possible ways very illogical. Then we have TEN-AXIS-Levosimendan study for pulmonary hypertension proceeding in phase 3. They are planning to start also another phase 3 study by the end of this year, another global study for this indication. And then we have another study for opevesostat, for metastatic cast-strain-resistant prostate cancer, and three studies ongoing, phase two studies ongoing for several or three different hormonal cancers, women's hormonal cancers, breast, endometrial, and ovarian cancer. And still, we continued the SUPIDES, which was the phase two study that formed the basis for those two, Opevesastat 3 and 4 studies for prostate cancer. And our TID inhibitor, ODM212 for solid tumors is proceeding well in phase one, and we are preparing to start the phase two program on the first half of next year. Then a few words on the sustainability, this time about decarbonisation targets. We have set an ambitious target to reduce absolute scope one and two greenhouse gas emissions by 70% by the year 2030. And also have 78% of our suppliers, meaning scope three emissions, covered by our targets. Then how do we do this? I think for the scope one and two, we have very concrete actions ongoing. The steam production is one of the most energy consuming phase in the chemical industry, especially in the API industry. And we are changing the energy source for steam production in all of our manufacturing facilities. In Turku, we are electrifying the steam production. In Oulu, we are changing to biofuels from the fossil fuels. And also, we will start an electrifying project in Espoo. So very, very concrete examples here. And we have even done a lot of concrete actions and projects before this, for example, in our Hanko plant. And in the supplier management, we are targeting to our highest emitting suppliers who are not yet aligned with SBT. And here we try to offer support and practices and technical expertise with our suppliers. And we have specified our outlook today. Our outlook for operating profit, we have narrowed from 410 to 490 million euros. So nothing drastic. We've been able to narrow it as the year has 10 months have already passed. There are two months left and we have much clearer view on how the year will pan out. And for the net sales, our outlook is from 1.640 million to 1.720 million euros. And here you can see the upcoming events for next year. And I thank you on my behalf and welcome René here with me to answer your questions.

Thank you, Liisa, for the presentation. As we said in the beginning, we will first take questions from the conference call lines and then we will turn to the questions you can type in through the chat function in the webcast. But at this point, I would like to hand over to the operator with the conference call.