Recordati Industria Chimica e Farmaceutica S.p.A.

Good afternoon. This is the Coruscant Conference Operator. Welcome and thank you for joining the Recordati first half 2021 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Ms. Federica De Medici, Investor Relations and Corporate Communications of Recordati. Please go ahead, madam.

Thank you, Sabrina, and good afternoon or good morning, everyone, and thank you for attending the Recordati conference call today. I'm pleased to be here with our CEO, Andrea Recordati, and Luigi Lacorte, our CFO. that will be presenting the 2021 first half results. They will be running you through the presentation. As usual, the second slide is available on our website under the investor section. After that, we will open up for a Q&A. I will now give the floor to Andrea. Please, guys.

Thank you, Federica. Good afternoon and good morning, ladies and gentlemen. Thank you for having joined us for Recordati's first half 2021 results investor presentation. So if you turn to slide two of the presentation, please, the one first half highlights. So Q2 was characterized by a gradual easing of the COVID-19 restrictions, which resulted in a partial recovery of our main reference markets and a gradual return to the near normal operating conditions. The recovery of several therapeutic areas in SPC, the contribution of Eligard coupled with a high double digit growth of our RRD franchise with both endo and metabolic performing strongly, resulting in a 16.6% revenue growth in Q2, offsetting the 10.3% decline recorded in Q1. Always to be remembered, the revenue trend in both quarters was always distorted by channel movement in 2020. Net revenue at the first half of this year is 770.8 million euros, which equates to a 1.4% growth versus previous year, or a constant exchange rate of 4.9% growth, reflecting the contribution of Edgard for $36.8 million, and that affects headwinds of approximately $26.8 million. Net of this effect, the growth would have been flat. Always considering the loss of exclusivity of psilocybin and beta-vastatin in 2020, which affected us for $19.8 million. and the impact, obviously, of the pandemic of the cough and cold product sales. To be noted, the significant growth of the red disease portfolio in the first half, which is a plus 18.5%, is thanks to the continued positive progress of Signifor and Miss Teresa, with 56.3 million of revenues versus the 32.8 million revenues in the same period last year, but also to the growth of Carbaglou and Sister Drops in the US and Europe. EBITDA of $300.5 million with margin of 39% of revenues. The slight decline minus 3.4% versus previous year is due to a very low level of operating activity in Q2 2020 due to the pandemic restrictions and the increased investments behind Aligards integration and promotion related costs and activities to support also the end of portfolio growth. Net income increased by 5.2%, reflecting non-recurring tax benefits of roughly $25 million, and on which I will leave Luigi to give you more color. As you will see later in more detail, in the first half we delivered roughly $205 million of free cash flow ahead of last year due to the lower absorption of working capital. Full-year guidance remains unchanged. In line with prior year trends, we expect operating margins in the second half to be below the first half levels. also reflecting increased activity in the field as market conditions improve, hopefully. Of course, market conditions remain a bit uncertain given the potential further waves of restrictions post the summer due to the spread of the new COVID variant, with some risk particularly around cough and cold. Just a few words on the latest news regarding the evolution of the governance. As you know, in recent years, I have worked with my team and the board to strengthen the management team. and the appointment of Rob Cormans as Chief Executive Officer effective from the 1st of December this year goes in this direction. I will step up to the role of Chairman and I will remain involved in the development of a group strategy and on strategic transactions and projects, supporting Rob and the senior management team. As mentioned in the press release, Rob is a highly experienced international executive with a strong track record of driving growth in business performance in pharma and biotech. with leadership roles in companies such as Serrano, Grunentab, Zentiva, and Teda, therefore bringing a consolidated breadth of experience across the board in the pharmaceutical industry. I'm therefore very confident that under his leadership, Ricordati will continue to follow this momentum and capitalize on what has been achieved so far. In the various discussions I had with Rob before his appointment, we had many chances to discuss the company's strategy and business model, which he supports. I therefore confirm a commitment to continue to consolidate our trajectory as set out in the recent three-year plan presentation that we presented, combining volume-driven organic growth of the current portfolio with value-enhancing PD and M&A. Before moving on to handing over to Luigi, who will provide more details on our financial performance in this first half, let me provide some updates on Eligard and the endocrinology portfolio. So if you turn to slide three of the presentation, please. Eligard transition moving ahead of plan. So to know the integration of Eligard in our organization is progressing well, if not very well, with 36.8 million of net revenue in the first half, which is slightly ahead of plan. We've completed the transfer of 20 marketing authorization transfers by the end of June, and we have 16 countries directly promoting Eligard. We're encouraging feedback from our customers. It is early days, but we're pleased to see that where we have started promotion, we are seeing a positive impact on the sales trend. Thanks to the early transition to direct selling, we focused full-year revenues now to be around €80 million from the previous €70 million. Note that this is mainly neutral at operating margin levels, being in large part reflecting a count of gross sales versus gross margin transfers revenue level. Moving on to the end of franchise slide, So the commercialization of Signifor and Signifolar is on track, recording net revenue of around $38 million. We have strong new patient acquisitions in all regions across all approved indications. Signifor grew more than 8% in in-market sales compared to 2020, slightly lower than in the prior quarters due to an increase in patient assistance programs in the US, which obviously was accentuated by the economic impact of the pandemic. We're also still very much on track with the Istoriza launch, and new patient acquisitions are progressing in line with our expectations, contributing net revenues of around 80 million, mainly in the US, France, and Germany. We continue to have strong support from top KOLs and patient organizations. And also importantly, we have now launched in Japan and recorded our very first sales for Istoriza there at the end of June of this year. Despite these stories, we're also seeing a higher incidence of patients on PAP, on patient assistance programs, and the slightly adverse USD currency effect in the early part of the year. We remain on track to deliver on the target we have set for the franchise at the beginning of this year, which is the range of 120 to 140 million euros. So at this point, I will leave the floor to Luigi to take you through in more detail on the first half results.