Orion Corp New B Shs

Good afternoon and greetings from sunny Helsinki. Welcome to Orion's half-year financial report January June 2026 conference call and webcast. My name is Tuukka Hirvonen and I'm the head of IR here at Orion. In a few moments, our CEO Liisa Hurme will go through the results and key events of the reported period after which you will have then the possibility to ask questions in the Q&A session from Liisa and also from CFO Rene Lindell. There's a possibility to ask questions through the conference call lines but also by typing them in through the chat function in the webcast. We will start with the conference call lines and then turn on to the webcast chat. For our Finnish viewers information that there will be a Finnish speaking interview of CEO Liisa Hurme available on Orion's internet page later this afternoon. and just before letting Liisa to take over a brief reminder about the forward-looking statements in the presentation and with these words it's my pleasure to hand over to Liisa.

Thank you Tuukka and good afternoon on my behalf as well. We have once again delivered a strong quarter. Our net sales growth accelerated and also profitability improved during Q2. This was driven by Nubeca royalties and product sales, and also our brandy products division had an excellent quarter. In research and development, we reached several key milestones, especially with ODM212, and I will discuss that molecule later on in more detail. In Q2, Our net sales increased by 25%, totaling 522 million. And operating profit increased by 69%, resulting in 34% operating profit margin and 177 million euros. and earnings per share was one euro. And of course, in our net sales development, innovative medicines was the main driver by 95 million euros. But also when we look at branded products and the size of the branded products division, 10.3 million is a significant growth rate. All the other businesses were more or less on par. And on operating profit, the volume increased our profit by 17. The volume growth increased our profit by 17.3 million. Again, royalties playing a key role here by close to 77 million. We have also finalized the liquidation of our Russian operations and the final cost of that liquidation, 3.3 million, is included now here in other expenses. And fixed cost, 15 million, is according to our plan as we widen and progress our research and development pipeline. accelerate our sales and part of it also in the sales and marketing cost include the increase of the royalties to Endo as the Nubeca sales perform well. And now I move to the first half of this year from January to June. A very much similar type of figures here. Growth or the increase by 22% totaling of 939 million euros during the first six months of net sales and almost 60% growth of operating profit up to 291 million euros and with operating profit margin of 31%. and earnings per share 1.64 euros. And innovative medicines, which clearly is the driver for the growth. Here we can see Q2 numbers on the left and then the first half in the middle. And it's really more than 60% growth both on the Q2 and during the first six months. Royalty is playing the biggest role and then smaller share of other services to our partners. And I think the most important message here is on the right side figure with the columns on different quarters where we can once again underline the dynamics of the Nubeca royalty growth for Orion or income growth to Orion. It's very, very back-end loaded. during one financial year. If you look at here the Q1 26 and compare it to this previous quarter Q2, a significant increase in royalties, but also in tablet deliveries to bear. I think we've also previously stated that the tablet deliveries may vary between the quarters and and this time there were a lot of deliveries from Orion to Bayer. Branded products, Q2 was strong, as I mentioned, almost 13% growth compared to the previous year's Q2. The biggest increase came in percentage, was in women's health, with our Divina product range, mainly Divi gel, which is an estradiol gel for hormone replacement therapy. Easyhaler franchise grew 7% and there the combination product budesonide formoterol contributed mainly to that growth. In CNS growth wasn't and Generics and Consumer Health. was on par compared to the previous year's Q2 and also to the first half of the previous year. The decline, a very slight decline here, comes from the generic prescription drugs as the consumer health products actually are growing with the healthy percentage. I can't resist to say here that if we would exclude Simdux and Dextor from this portfolio and look purely our generic portfolio and not include the legacy product, the generic business growth was 2%, a very healthy growth percentage for a generic business in Europe. And we've also made a license agreement for new biosimilar products. for European Rights of Nivolumab with Shilpa, a partner that we are already developing products, but now we have a new biosimilar and we are expecting to launch that in 2030s. Animal Health had a bit more tough quarter in Q2. But let's remember that the previous year's Q2 was, if not all-time high, but exceptionally high. So the comparison period was tough. And it's always a question of deliveries to our partners in this business. And when you look at then the first half of this year compared to the previous one, it's minus 2.4%. and we are expecting the growth to accelerate towards the latter part of the year. We've also received very, very good news, an approval by FDA for a new product called TESI. The molecule is tasipimidine. It's an oral solution for the anxiety and fear in dogs, especially if they go to the strange places or they need to And we expect our partner to start commercial sales in mid-27. And Fermion, external sales here, almost 20% growth in Q2 and 17% during the first half of the year. Here, the delivery timing is all. So these are big quantities that we sell to our business to business customers. So we can clearly see that the first half of this year has been very busy in that front. And we had, and I'm sharing this since there has been also news in Finnish by the Finnish Broadcasting Company and here in Finland in news that there was a water damage at one of the fermium plants on Hanko site last week. During the summer maintenance period and we are fully recovering from that water damage and all the activities are implemented as we speak. And based on our current understanding, this will not have a material effect or impact to Orion or any disruption to continuity of our key products. And Our top 10 product list tells the same story as the therapy areas or the divisions, but product by product. I'm not going to go that through in detail, but I think the key message on this slide is clearly that now already in Q2, innovative medicines is the biggest division in Orion. Genetics being the second biggest and branded products the third biggest division. Our clinical development pipeline has stayed the same from the previous Q1 report. So no new projects included or no new stages entered. We already reported last time that we had started the combination study with our DEET inhibitor ODM212. and now most of the readouts for these studies are actually in 27 or 28, like for Nubeca studies and Opevesostat studies, but we are expecting level study by TENAX to be read out during the latter part of this year. And I already mentioned ODM212 and let's look at it in, let's look at that and a few more in a bit more detail. So ODM212 is a DEET inhibitor and we develop it for certain cancers. It has two different mechanisms that we can use for the benefit of cancer patients. The one has to do with the HIPPO pathway and some cancers are driven The tumor growth is driven by this HIPPO pathway. So with this TEET inhibitor, which binds to the TEET transcription factors, we can actually limit the growth of the tumor in these certain cancers. And currently we are studying mesothelioma and EHE. And these are very rare cancers where there is no specific treatment Exactly for these cancers. So if we can find a solution for patients, it would be really great. And based on our phase one results, we strongly believe so. The other part of the story for AT inhibitor is that it can also prevent the resistance for some current currently used cancer medication. because it also limits some of the mechanisms that cells can develop to circumvent, for example, immune checkpoint inhibitors, chemotherapy, or KRAS, KRAS inhibitors. And here we talk about different cancer types like pancreatic cancer, non-small cell lung cancer, and also on mesothelioma. So there are two ways to use TID inhibitor specifically for a certain cancer that is driven by this HIPAA pathway or trying to prevent the resistance for currently used cancer medication. So this far we have carried out phase one study as a monotherapy using only ODM212. and we've seen very promising results on the efficacy. Of course, those are very early signals in mesothelioma and EHE and also we've seen a very good side effect profile. We know that in oncology sometimes even a bit rougher side effect profile is approved, but here we really can see that it's very well Based on these results, which we actually announced in ASCO this year, we started a phase two study for mesothelioma and EHE. And this study is currently ongoing and expected to read out in late 27. Based on this monotherapy study with ODM212, we also initiated a combination study with some of the usually used drugs as the ones that I already mentioned for pancreatic cancer, non-small cell lung cancer and mesothelioma. And as we think that we have a potentially best-in-class TID inhibitor in our hands, we also believe that if this study is successful, we can solve many problems that are related to the resistance of current medication and this could become a drug of choice to be combined with those medications. We've also received orphan drug designation in US and Europe for mesothelioma and that of course validates our belief that this is a very, very important study and important drug for patients. and the combination study results and the study is a phase 1b slash 2 study as we are also trying to find a suitable dosing for these combination studies before we go seamlessly to the phase 2. So this study's readout is in 29. Now to a very, very different topic, sustainability. Orion was listed I think for fifth or sixth time now as one of Europe's climate leaders by financial time this year and I think this graph speaks for itself as you can see how our emissions have decreased year by year. We started the program early on many many years ago and in 2019 we We changed and switched fully to clean electricity, carbon-free electricity. And then we've also done many, many different activities to reach our goal. We have changed from crude oil in our steam production first to gas, then electricity. We have local heat stations in our campuses where we use the energy or heat coming from our Manufacturing facilities for the whole campus. And we are also carrying out many different type of renovations to be as carbon neutral as possible. We also understand that there is a way to go. And finally, I think the last piece of the emissions will then be compensated in the end. And today we specified our outlook for this year. This is another quarter, another strong quarter. So we thought that this is the place to do it. So we actually hiked up the lower range in our outlook by 50 million. So now the range for net sales is from 2 billion to 2.1 billion and the range for our EBIT operating profit is from 650 million to 750 million. And here you can see our upcoming events. Next time we will be reporting in late October and then the full year report of 26 will be in the middle of February. I thank you for your attention.

Thank you Liisa for the presentation and now it's time to open up the floor for questions. As I mentioned in the beginning we will start with the conference call lines but please do remember that you can also type in your questions by using the webcast chat function. But with this I would like to hand over to the operator for the first questions please.