Recordati Industria Chimica e Farmaceutica S.p.A.

Good afternoon, this is the Core School conference operator. Welcome and thank you for joining the Recordatis 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 Miss Federica De' Medici, Invest Relations and Corporate Communications. Please go ahead, Mel.

Hello, everyone, and thank you for attending the Recordati conference call today. I'm pleased to be here with our CEO, Rob Cormaz, and our CFO, Luigi La Corte, who will present the 2020 first half results. Then we'll be running you through the presentation. As usual, the status guide is available on our website. We are also joined today by our two heads of business units, Alberto Martinez for specialty and primary care and Scott Vescatore for rare diseases. Both gentlemen will be on hand to answer your questions together with Rob and Luigi during the Q&A session. I will now give the floor to Rob.

Thank you, Federica, and good afternoon, ladies and gentlemen. Thank you for having joined us today on the RECRATIT 2023 half-year results. We've really delivered a strong financial performance with continued growth across our business and with ongoing delivery of sector-leading margins. With revenue at 1 billion 44.3 million, up 17% versus previous year, or 15.4 on a like-for-like and constant exchange rate, we confirmed the strong momentum of the group across our entire business. SPC grew double-digit, 10.2% versus last year, or 15% at constant exchange rate. This business performance has been ahead of relevant markets and across all key therapeutic areas. thanks to a continuous improvement of our competitiveness in every single market. Also, rare disease has delivered very strong results, with double-digit growth at 32.2% versus last year, and 15.5% on a like-for-like and constant exchange rate basis, with a very strong growth of both the endo and the onco, fully in line with plan, and very resilient sales of metabolic franchise. The group has been able to achieve these strong results despite strong FX headwinds, especially over the most recent months. The adverse FX impact has been approximately 30 million or 3.3%, mostly concentrated in quarter two and mainly affecting our specialty and primary care business unit. What I would like to highlight is the strength of our profitability with EBITDA at the margin at 38.9% in the first half year. This has been enabled by operational leverage and by very strong continued cost discipline across the business. This brings an adjusted net income of 287.4 million, up 27.9% versus last year, driven by the strong positive operating performance and also lower net financial charges. We are very confident in our ability to convert revenue in positive operating income and even stronger free cash flow. Free cash flow was up 43 million versus last year and reached 261.7 million. This brings to secure a leverage of 1.8 times EBITDA. Our key R&D pipeline projects, such as CYCNE4 in post-bariatric hypoglycemia, CARZIBA in the US, our REC559 program, and our CARBA group launch in China are all in plan, and we are very happy with the progress we're making there. And finally, last, definitely not least, I'm very proud of the recent agreement with GSK. We'll give you a little bit more color in the slides to come. But this allows us really to strengthen our specialty and primary care urology franchise, where we now have a completely leading portfolio in BGH. Thanks to this excellent performance and the strong momentum of the businesses, I'm very pleased to say that despite the very strong ethics headwinds over the recent months and the expected headwinds to come, we can confirm that we are on track to deliver the full year guidance for 2023 as to the updated guidance that we gave in May. So on the next slide, happy to share a little bit more background and color on the agreement for the distribution of two leading brands from DSK's urology franchise in Europe. Avodart and Combodart are indicated for the treatment of moderate to severe symptoms of benign prosthetic hyperplasia and for the reduction in the risk of acute urinary retention and surgery in patients with moderate to severe symptoms of BPH. Recordati will commercialize both products across 21 countries upon completion of the relevant more administrative transition activities which we expect to be finished with the majority by the end of this year, 2023. GSK has received an upfront payment of 245 million, and we will start recognizing revenue and margin upon country-by-country transition, and GSK will continue to receive income on an ongoing basis for the supply of product. The agreement is fully greeted from 2024 onwards, and contributing to top and bottom line already in 23, but minimally so, with a very small contribution in net revenues of 10 to 20 million and a slightly positive EBITDA contribution as well. Our ambition for Avodart and ComboDart is to stabilize and then even generate a modest growth in our key markets. So we're very excited to get this opportunity and be able to bring these two products into our urology portfolio. And we see a number of clear advantages. One, this was clearly in line with our strategy as we set out. We bring in well-established or originated brands in our core therapeutic area, highly synergistic with UroREC and being able to really use the existing sales force that have shown to be able to drive also Eurorack sales post loss of exclusivity. Both products are both loss of exclusivity but are extremely well established brands that we feel confident that we can bring into our portfolio combining with Eurorack and be able to cater to the different needs. but there are different patient segments for all three products, different indications for all three products, and we see a very good opportunity for portfolio management without additional cost to be able to really bring this in a very nice, accretive way. So very happy with this agreement, this long-term agreement with GSK, and we believe this will help us to grow the sales, clearly add to the sales of SPC in urology, and that's an important aspect as well. So this deal, you will start to see the real impact in 2024. And for the results of 2024 so far, I'd like to hand over to Luigi to take us through the financial performance in the first half.