Roche Holding AG

Ladies and gentlemen, welcome to Roche's first quarter sales webinar 2025. My name is Henrik and I'm the technical operator for today's call. Kindly note that the webinar is being recorded. I'd like to inform you that all participants are in listen-only mode during the call. After the presentation, there will be a question and answer session. You're invited to send in questions for this throughout the entire session using the Q&A functionality of Zoom. In addition to that, you may also raise your virtual hand to address your questions verbally. for participants joining via phone, to raise your hand to star nine on your phone's star pad. When you then get selected to ask your questions, please follow the instructions from the phone and press star six to unmute yourself. One last remark, if you'd like to follow the presented slides on your end as well, please feel free to go to www.woosh.com slash investors to download the presentation. At this time, it's my pleasure to introduce you to Thomas Schieneker, CEO of Woosh Group. Mr. Schieneker, the stage is yours.

Thank you very much. And I'm happy to share our Q1 2025 sales with you today. Now, let's look at our performance. We had really a good start in 2025 with group sales growing 6%. And this was driven by pharma with, again, very strong sales growth of 8%. So you can see that we continue our very strong momentum on the pharma side. Diagnostics was flat, and this was due to healthcare pricing reforms in China. Matt will cover that. Again, this did not only impact us, it impacted the entire industry. And this is something that we had flagged also at the full year results presentation in January. The LOE impact was also in line with guidance. So now let's look at the key milestones in Q1. On the pharma regulatory side, we had EU approval of Columbia, plus GemOx in second line DLBCL. And this is based on the very strong phase three Starglow data. And it's the first and only bispecific with an EU approval in second line DLBCL. We also had the US approval of Sosfimo in DME, so the second indication, and DNKs in acute ischemic stroke. We have the filing in the US and in the EU, Vocociva in lupus nephritis, And this is based on the positive phase three regency data, which was presented at WCN and is also published in the New England Journal of Medicine. And we had the filing in the EU for Lunsumio in third line follicular lymphoma. We've had a number of positive phase three readouts. Let me highlight the Sanmo phase three readout from Lunsumio and Polyvi in second line, DLBCL. And we are now excited to move now our second bispecific into chemo-free combination with PolyV into early lines of treatment of DLVCL. More information on the positive outcome will be shared later in this year at a medical conference. We've also taken a number of phase three decisions. As we mentioned at the full year call, we said there are potentially seven NMEs that could move into phase three. which would be a record in terms of how many enemies we move into late stage. And these are all based on the bar criteria. In Q1, we did make two decisions to move two of them into the last stage of development, into phase three, based on the latest data. Trantinumab being one of them in Alzheimer's disease, the positive data was shared at 80 PD and phase three is expected to start later this year. And the second one is NXT-007 in hemophilia A. And the phase two data for this will be presented later in this year. We also had a very exciting business development deal, this collaboration with Seed and Pharma and Petrolintide, the leading long-acting amylin. And there will be more on this in a couple of slides from myself, but also Teresa will share more information on this. On the diagnostic side, we had menu expansion on the Cobas LIAT. So our point of care PCR system with lab-like performance with CT and G really building out our menu specifically here on STI. And we continue to place more of these systems in the market. Also very excitingly, we had the unveiling of a novel SPX sequencing technology. So sequencing by expansion. And I will also provide a little bit more context as well as Matt will provide more context And we shared real world and live experience of customers here at the HBT. We have significant new flow upcoming in 2025 for both pharma and diagnostics. And Therese and Matt will go into more granularity here. Clearly, there are a number of phase three readouts coming, including multiple NMEs that could lead to launches next year. across oncology with geradestrin, neurology with fenabrutinib, immunology, astagolamab, and ophthalmology with vermiculobar. Equally, we still have a number of phase three enabling readouts coming, which could enable us to move another five molecules into phase three, again, keeping to the bar criteria. Diagnostics is looking forward to several key launches still in 2025, including the Lexus P-Tau 181 and the high sensitive troponin T next generation assays. Now let's move on and let's take a closer look. We've had strong sales of 8% on the pharma side. So continuously very strong momentum. Diagnostic is flat. And I already mentioned that this was driven by healthcare pricing reforms in China, not only impacting us, but the entire industry. Now I used to have a favorite slide and I have a new favorite slide, which is this one. which really shows that over the last four quarters, we've had a significant growth of 8% across in our entire business. But if you go back until 23, we really had an underlying growth of 8% consistently. So we have consistently performed very strongly over the last two years and one quarter. And this is a strong pickup in our growth versus the 20 to 22 timeframe. Now, let me go to the key growth drivers. And I will start at the right top. Pachetta FESCO conversion is now at 47%. Both of our, on the hemophilia side or hematology side, both of our CD20, CD3 bispecifics are advancing now into second line DLBCL. And this is increasing our opportunity significantly. Column B, GemOx receiving EU approval and the positive phase three results from SunMall. NXT Series 07 moving into phase three, as already mentioned. On the neurology side, very importantly, Sonovo received the permanent J code granted on 1st of April. So we should definitely see a pickup here. As mentioned before, we do believe that the subcontainers version of Ocrevus will add two billion incremental sales. And right now the consensus is at about eight and a half billion. We feel very comfortable with that consensus. And the two billion incremental will obviously be, there will be more sales for the subcontainers version, but there will also be some switches. Evristi receiving U.S. approval for the tablet formulation and Xola still doing extremely well with now more than 50,000 patients on treatment. Well, Vaismo keeps expanding market share in all approved indications, and Teresa will talk about that as well. And she will also talk about the market contraction in the branded segment because of less funding for co-pay assistance foundations. But we keep seeing very strong momentum, as you can see here, with 17, or I think the bias was 18% growth. And we do believe that we can continue this kind of momentum going forward. Diagnostics, I've already mentioned as well. Now, the young portfolio continues to drive growth in the near to mid-term. If you look at the right-hand side, now the Young Portfolio accounts for 59% of our sales, up from 55% the year earlier. We have four pivotal NME readouts for the new NMEs. As I mentioned also before, astragalumab in COPD, vermicubart in UME, gerodestrin in breast cancer, and fenabrutinib in multiple sclerosis. And we do believe that this new portfolio will continue to drive growth at least until 2028. And we know that diagnostics will continue to contribute positively in terms of growth, especially with the new products. And all positive readouts that we should expect over the next years will then add to this growth. We don't have a cliff situation. And with that, we're at a more favorable starting position than many of our peers. Now, let me just highlight a couple of things on the recent announcement that we've made of our investment in the US. We have a strong legacy of partnership with 130 countries around the world. We basically have the full value chain present in most of our key markets, such as the US, in Europe with Germany, Switzerland, Japan, and China. It's always been our strategy to build out a fully value chain in each of these markets to be present where the patients are. And key parts of this legacy of investment is also our research and development and manufacturing footprint in the United States. Now, Tuesday's announcement to invest further 50 billion into R&D and PP&E in the US until the end of the decade, let me put that into a bit of context. This would be almost a doubling of our investment in the US over the next five years. compared to the previous 10 years where we invested 67 billion in R&D and PP&E. Let me also say, this does not mean that we change what we've said before in terms of CapEx availability between three to 4 billion annually. This is already included in any of these comments that we've made in the past. It also doesn't change what we've said in the past in terms of R&D spending. You can expect R&D to be flat this year, and that we keep very disciplined when it comes to our spending. Currently, we have 13 manufacturing and 15 R&D sites in the US across pharma and diagnostics, and we are planning to add two new sites. First is this announcement of investments, including the construction of a new R&D site in Boston. We've discussed this as a team that we have a very strong presence on the West Coast in terms of R&D, but we didn't have a presence on the East Coast. And so we strategically said we wanted to tap into the ecosystem in the Boston area, which is, I would say, next to San Diego and San Francisco, the third key ecosystem that we want to be present in. And that's why we've committed to make an investment here and also in collaboration with Harvard. And then there is also one new manufacturing site that we will establish in the U.S. where we've been in negotiations with different states in the U.S. We have not named the location yet, but we'll do that soon. And this is basically also for the manufacturing of peptides. So the incretins and also the amylin. And so both of our new sites will have a strong focus on CVRM peptides. Let me also highlight that we are probably in a much better position than most other companies in terms of our manufacturing capacity that already exists in the United States. Our drug substance capacity utilization is at 50%, which truly gives us a lot of flexibility to adjust our manufacturing volumes. And this is due to the fact that, and you can see it on the right hand side, that we've driven a five-fold productivity increase in terms of yields from our cell lines. So what that's enabled us to do is actually some of our medicines that we already produced in the US, we could increase the manufacturing in the US basically overnight of these medicines. And the only remaining medicine that we have to tackle when it comes to tariffs is one that's currently not being produced or produced in the US. And we already started the tech transfer of this medicine a number of weeks ago. Let me also highlight that When we acquired GenTech, not only did we keep manufacturing there, so we didn't move to Ireland, for example, we also kept our IP there. And with that, we've been a significant taxpayer in the U.S. Again, so I would just highlight here, we're probably in a better position than many others. Taken together, I do believe this sets a stage for next era of growth and innovation for us as a company to benefit patients in the U.S. and abroad. But also just want to reiterate, we'll also continue to invest in countries like China, where we're also expanding our manufacturing footprint. Now let's move to the outlook. And I want to highlight two areas. One is Roche sequencing, and the other one is our efforts around CVRM. And I know both Matt and Teresa will go into more details on this. At HPTV, we unveiled our novel sequencing solution, which combines our high throughput sensor module that we developed over the last years. And now comes the secret sauce. That's the SPX chemistry, the sequencing by expansion chemistry, which actually expands the DNA 50 times so that you get a better signal to noise ratio. With that, you increase the accuracy significantly and you increase the speed and throughput because you don't actually need to slow down This molecule, as it goes through the pore, it goes through very quick and you get a very clear and clean signal. With that, we have a very high accuracy, which is fit for clinical applications. We are extremely fast and we have a lot of throughput. And what also is unique is the flexibility. Because with technologies that are used today, you have to run a full plate to get the benefit of the price and cost. You don't have to do that with this technology. So we do believe that we are in a pretty good position here as well. Let me talk about our commitment to become a leader in CDRM. In IFAMA, we now have a broad portfolio of differentiated assets that address unmet needs in obesity, diabetes, and a number of adjacent indications. Let me just highlight there are probably more than 200 comorbidities that are linked to obesity. The GLP-1 GIP from the Comet acquisition, and also in Q1, we announced a collaboration with Sealand Pharma to develop petrolintide, a long-acting amyloid analog, and I know Teresa will go into that detail. Also, in Q1, we announced a plan to build a Boston Innovation Center in partnership with Harvard, and this will be focused on CVRM drug discovery and development. On the diagnostic side, again, let me highlight this. We are the global leader in this space. We know all of the key opinion leaders. We have the leading portfolio of cardiac and metabolic markers. We develop holistic solutions for the management of the diabetes and cardiac indications. And this includes CGM that offers unique smart algorithms and easy one-step application. But I know that both Matt and Teresa will cover more here. Let me just highlight here on the 2025 pipeline for pharma, the positive news flow and also the negative news flow. In green, you see the positive and in red, the negative. On the negative side, let me just highlight skyscraper 07 in ESCC, which missed its primary endpoint. But let me also highlight that when SkySix failed middle of last year, we stopped all of the teragulma studies that were still in progress and could be stopped as we mentioned at the time in this investor call. And we only let the ones run where it was not appropriate to stop these trials anymore. On Ocrevus high dose, which missed its primary endpoint. Again, I just want to say we're comfortable with the Ocrevus consensus where it is right now, which includes the 2 billion incremental sales. which are driven in the combination of a subcut and IV. And let me also say that we don't see a cliff situation also for Ocrevus beyond the end of the decade because of Ocrevus subcut and Ocrevus high concentration, which you see in green here as well. On the positive side, again, I just want to mention Trantinamab and NXT-007. moving into phase three, column V with the EU approval, non-sumio with a positive phase three readout in second line DLBCL, obesity for gym three to nine, where we are starting a phase two combination with incretins, and atopic dermatitis and MASH, two new indications for Tempkibard, DMD for Endspring, and the high concentration Ocarus that I mentioned. Let me just close by saying that we confirm the 2025 guidance. As you can see on this slide, sales growing mid single digit, core EPS growing high single digit and dividends to further increase. With that, thank you very much. And I hand over to Alan to take us through the finance slides.

Yeah, thanks, Thomas. As everybody knows, a sales call today. I hope everybody's well. So my contribution will be brief today. Yeah, let me jump into the sales and what you see here, the reported sales in Swiss francs quarter one 2024 compared to quarter one 2025. So in total, a 7% increase. Let me start with the highlighted 6% in constant currencies. And you see we have different factors here. I think one element is really here on the diagnostic side. You see the China healthcare pricing reform that Thomas has mentioned already, which was a reduction for sales on diagnostics. On the other hand, excluding China, they've grown by roughly 5%, which I think is quite an achievement. So Matt will dive into this. And you see on the pharma side, I think really good underlying growth. Then as expected, the loss of exclusivity impact with a certain erosion in Q1, As you know, we expect more erosion for Actemra in the quarters to come. So still, we stick to our expectations that we're going to lose 1.2 billion in that segment over the year. You see, currency is a positive in Q1, you know, translating into Swiss francs. So to get to the plus 7%, and I will dig into that. But let me say, enjoy the moment. When you look really then at the exchange rate impact on the sales growth, and that is the 6% on the left-hand side in constant rates that you know already. It's now 6.4% as we added the decimal. And you see on the right-hand side in Swiss strength, the 7.2% growth. And then you see the currency fluctuations in between, and you see a major contributor to the performance has been the U.S. dollar, which has strengthened in that period. We all know what happened in April, and I will talk about that in the next slide, and here it is. Because, as you know, what we do is we keep all the currencies stable at the end of Q1 and then basically project them until the certain quarters, but also until the end of the year, and then measure the impact and announce that here. But let me say one thing. After end of March, as mentioned, I think we have seen a major volatility and a major weakening of the US dollar. And I will get to that. When you really look at full year 2025 impact, as of April 23rd, so really recently, and you assume all these currency rates remain stable until the end of 2025, we will have a currency impact at full year. on group sales of minus five percentage points. So quite significant. But as said, we're also not alone. I think other companies will be affected by this as well. I know it is of interest what that means for cooperating profit and for core EPS. So let me give you these projections, which are certainly highly speculative and very unlikely that they will really realize. But for cooperating profit full year, it would mean a minus seven percentage points and on core EPS, an impact of minus eight percentage points. So that's quite significant. As I've said, you see Q1, enjoy the moment, I think for the next quarters to come. I think if the currency stay where they are basically today, I think we will see a much worse in picture. Good, I think Thomas said everything about the guidance. I don't wanna just reiterate here that we confirmed the guidance. for 2025. And with that, happy to move over to Lisa.