Almirall, S.A. (ALM) Earnings Call Transcript & Summary

Hi. Good morning, everyone. Thanks a lot for joining us today. My name is [ Anton Natali ]. I'm a member of the JPMorgan healthcare investment banking team. It is my pleasure to introduce you to our next speaker this morning, Peter Guenter, the CEO of Almirall.

Well, thank you very much, and thanks to JPMorgan to invite us and give us the opportunity here to present to you the transformation of Almirall. And this presentation will also be webcasted and later made available on our website. So in the next 20 minutes or so -- so we are a public company, so this is our disclaimer. In the next 20 minutes or so, what I thought going to share with you is give you a flavor of the work we have been doing with the team over the last 2 years or so and hopefully convince you that Almirall today is a quite different company than Almirall back a couple of years ago. I will shortly or briefly walk you through why we think that being in medical dermatology for a company like Almirall is a good place to be, but it's more how you want to be in dermatology than the question, should you be in dermatology. I'll touch briefly upon a couple of innovative launches that we are going through and that, of course, are extremely important to us. And I'll finish on our capital allocation and -- before bringing it to a close. So first of all, the transformation is well represented here. So basically, if you take a step back, you go back to October 2017, which was kind of a new setting of the company, there was a profit warning in 2017, the U.S. acquisition that was done a couple of years before turned out to go in the wrong direction. And then for me, the new Almirall starts, if you will, with the launch of Skilarence which was our first launch in psoriasis in Europe, which occurred in October 2017. We made a first in-licensing deal for a new mode of action in actinic keratosis, which is a pre-cancerous and very frequent disease in medical dermatology. At that time, tirbanibulin was in Phase II, and I'll come back in a minute on where the product is now. Very important turning point was the acquisition of the medical dermatology portfolio of Allergan in the U.S. in August 2018, which came with an innovative novel antibiotic for moderate to severe acne, which you see appearing a little bit later, which was then launched a couple of months later in the U.S. called Seysara, and I'll come back to that launch in a minute. We had our first launch of a biologic in Europe, so also a very, very new event to Almirall. So this is in-license of Sun. So we have the European rights on ILUMETRI, which is an antibody -- a monoclonal antibody, IL-23p19. And then I would say, perhaps the most important of all happened in February 2019 where we entered into an option deal with Dermira and -- to acquire the European rights on lebrikizumab, an IL-13, for the treatment of atopic dermatitis. The option deal was constructed in such a way that we had the possibility to look at the Phase IIb data and then decide whether we would exercise the option or not. And of course, when we saw what we thought to be very interesting data, we exercised the option in June 2019, which gives us unrestricted access to this -- what we think as best-in-class potential in atopic dermatitis and perhaps beyond for EU. Then we announced a slate of deals last week, actually. I will come back a little bit more in detail on Bioniz. In the interest of time, I cannot talk too much about the 2 others, but we're also very excited about it. So 23andMe Company, well known to everybody, leveraging its wealth of data in genotyping and phenotyping to also do target discovery in drug design. And actually, we're very happy that we are the first company to which they have out-licensed the rights on an anti-IL-36, and we're very excited by that. So this is a bispecific with lots of promises in dermatology and probably also beyond dermatology. The WuXi deal is also design of bispecific antibodies on undisclosed targets, so I will not talk about which target we are talking about. And then finally, last week, Lilly announced that they had intended to acquire Dermira, which, of course, for us, I think, is extremely good news. Number one, it validates the hypothesis that, indeed, lebrikizumab is a very interesting molecule. And number two, with the power of Lilly behind this brand in terms of medical affairs, evidence generation, evidence dissemination, life cycle management, et cetera, et cetera, will, of course, also be very, very positive for our development in Europe. So this is really what we're trying to do, focus on those launches and building a real pipeline of innovation for severe unmet medical needs in medical dermatology. In parallel, we look, of course, also at the numbers, right? And this is what you see below. So back in 2017, a total EBITDA for the company of EUR 142 million. And here we are, 24 months later, and we are looking at a total EBITDA of EUR 300 million to EUR 310 million. So in 24 months, we basically -- well, significantly more than doubled the EBITDA. What becomes even more interesting is if you look at core EBITDA. So you may remember that in the P&L of Almirall, you have a line other income, which is basically income that we still receive from a former deal where we divested the respiratory business to AstraZeneca back in 2014, and that is finally something that we don't manage. What we really manage and where we really would invite you to look at is what we call the core EBITDA, which is the EBITDA stemming directly from our business. And if you look at that number, you see that we have gone from EUR 70 million in 2017 to EUR 245 million to EUR 250 million in 2019. So in other words, it's more than a triplication of that core EBITDA. So I think this is a nice scene setter for, let's say, what we have been doing in the last 2 years at Almirall. This comes not by coincidence or by chance. This comes with the team behind. And I would also -- I will not go too into all the details, but basically, we have a very global, very experienced leadership team. We have actually as many Americans in our team than we have Spaniards in our team. There is also a Belgian. There is a German. We have recently hired Dr. Koscielny from Celgene who didn't want to move to BMS with Celgene, and we had the opportunity to hire him as a Chief Medical Officer. We have Bhushan here today, Head of R&D. We have Mike, our new CFO, and you see that this is a heavyweight team with quite some experience also in big pharma. So all this results in really developing Almirall into a real specialty care player in the field of medical dermatology. And I guess the keyword on this slide is focus. So we are talking here about geographical focus. If you look at the right, you see that basically, close to 90% of our sales now stem from the U.S. and from Europe, which, of course, remains our stronghold. In rest of the world, we have no direct presence. So what you see is basically partnered sales with legacy products of Almirall. If you go to the left slide -- the left part of the slide, you see now that medical dermatology is now close to 50% of our total business. And this share, of course, will continue to increase with the launches that we are currently undergoing and with the future launches that we will have in the coming years, which are all in the field of dermatology, okay? The rest is -- well, some of the business in CNS. We have some OTC business in Spain. We have some cardiovascular business in Spain, which is our historical legacy business in Spain. Now why medical dermatology? Well, if you look at the macro picture of dermatology, medical dermatology, it's a very dynamic market. It's an enormous number of dermatological conditions. People always think, well, this is acne, atopic dermatitis and psoriasis, that's it. No, it's way, way, way larger than that. What we try to do here is present it in 4 different buckets. Of course, the big ticket items today in dermatology are psoriasis and increasingly also atopic dermatitis. The third part is there, what I would call the conventional dermatology like, for example, acne and rosacea. And then the top part of that stack bar is all the rest. And there, things like oncodermatology, rare diseases is really where we try to focus. And the nice thing is actually that with our pipeline building, that we have tried and also succeeded to be present in each of those segments. So with our European business in psoriasis with Skilarence and ILUMETRI, we are going to launch lebrikizumab in Europe in 2023. We have launched Seysara in the acne space in the U.S. We have our AK drug in -- which is an oncodermatology indication, so with Europe and the U.S., and then the BNZ-01 on which I will elaborate a little bit more in a minute, for which we have global rights. And of course, you will see more and more with the licensing deals we do, that we try to get global rights. And of course, all the proprietary research of products that we are managing, of which some will move into the clinical pipeline in 2020, evidently ours. So by definition, we will have global rights for these products. So pipeline, I must say, when I came to the company, the pipeline was mainly composed of reformulations. We halted most of these projects. Two were in Phase III, so we let them go to the end, so topical finasteride and topical terbinafine. These products are now under registration in EMA. We consider that they do not fit in our new strategy of Almirall, which is to really focus on high unmet medical need areas and varying of the products, so we will out-license these products. But what is more exciting is the top part of the slide where we are trying to build a clinical stage pipeline with very exciting products, and we are talking about tirbanibulin, lebrikizumab, BNZ-01 and much more to follow in the course of 2020 and 2021. So also very happy with the progress we have made. If you would take together the peak sales of the launches that are ongoing, so Skilarence, ILUMETRI and Seysara, and you would combine that with the peak sales of the 2 top products, tirbanibulin and lebrikizumab, we are looking at combined peak sales of more than EUR 1 billion for a company that does more or less EUR 1 billion. So you can see the importance of what we're trying to build here. Let me just focus now on lebrikizumab because I'm not sure that the potential of this drug is sufficiently recognized by observers who look at Almirall. We think that this product has a potential to be best in disease for atopic dermatitis. You see on the right part of the slide the patient funnel. So basically, it means that the number of patients will probably evolve in the direction of the number of patients you have today for psoriasis. You see the split-out between moderate to severe, how many of those are treated, how many of those are considered to be eligible for new systemic treatments, so either antibodies or potentially the oral JAKs when they will come to the market. And you see actually that this is going to become a very, very important market in dermatology. The good news is that today, there's only one biologic that is marketed, dupilumab of Sanofi. Also good news is that Sanofi has been able in Europe now to more or less secure very good market access for dupilumab. So we will not have to open that market access in atopic dermatitis. We will be able to follow on, on what Sanofi has already created with dupi. All observers say that the number of atopic dermatitis patients will be at least the same as psoriasis, but even with the burden of disease that it's probably even more important than the burden of disease in psoriasis. And as I mentioned before, we anticipate to launch this early 2023. Now why we're so excited about the product and why we think that the Phase IIb data had been so good, because the product has a very high affinity and specificity for the IL-13 cytokine. So basically, more and more data show that atopic dermatitis is really an IL-13-dominant disease. This is exactly what we do is blocking the IL-13 cytokine with a very high degree of affinity and specificity. And basically, by blocking the IL-13 cytokine, you prevent the heterodimerization of the receptor that you see there. So this is the IL-4 alpha and IL-13Ra alpha-1. And what is also very original with lebrikizumab is that it allows IL-13 to bind to the IL-13R alpha-2 receptor, which is postulated to have an anti-inflammatory role by neutralizing the excess of IL-13. So this is also an interesting differentiation threat, which, for example, tralokinumab, which does inhibit that second receptor. If you then look at the Phase IIb data, which are public, which are out there, so it is nothing new here, but I wanted to quickly have a look at it. If you look at pruritus with an every 2 weeks dose regimen, we see a 70% reduction of the pruritus score. If you use the product every month, you still see a 47% reduction of the pruritus score. If you look at EASI-90, which is a very high bar to reach in atopic dermatitis, you see that for the every 2 weeks, 44% EASI-90; and for the every month, 36% EASI. And then if you would make indirect comparison, which I don't like, but since everybody does them, I also do them, you will see that those data compare very favorably with what is out there, either in the clinic, either in clinical development. Safety looks -- appearing very reassuring. You see very low data on conjunctivitis or herpes infections. Last slide on lebrikizumab, really interesting. Since we exercised the option on lebrikizumab, so in June 2019, there's only been good news to the product. So the oral JAK, upa, from AbbVie has been launched in the U.S. in rheumatoid arthritis, is also under development in AD. But they have received the black box warning, so it is very reasonable to assume that also in atopic dermatitis, they will have a black box warning. We have initiated Phase III even a little bit ahead of schedule in October 2019. Then 2 potential competitors dropped out of development. So there was the IL-17C from Novartis that was stopped in October 2019 and the anti-IL-33 from AnaptysBio that was stopped in November 2019. In the meantime, as I mentioned before, dupi working on access and also opening the way for future incumbents in that indication. And Sanofi announcing in December 2019 global peak sales for Dupixent of EUR 10 billion, so also kind of an external validation of the potential of these products in these therapeutic areas. And then in December also, tralokinumab hit its primary endpoint, but no details were provided. And perhaps the most important part was, of course, in January, which -- with the acquisition by Dermira -- by Lilly of Dermira, kind of for us also a very, very solid external validation that we made the right choice when we took the option on lebrikizumab. Now the strategic deal with Bioniz is also a very interesting one. So basically, what we've done here, we took again an option, so we de-risked it for us, on a product that is in Phase I/IIa in CTCL. CTCL is a very severe disease in the field of oncodermatology. I'm not going to dwell on all the details in the interest of time, but the burden of disease, the high unmet medical need. And what this company has is a very innovative platform where they can design peptides which tackle difference -- or which tackles the signaling of different cytokines with blocking a common receptor. And this technology, in the case of BNZ-1, which is their lead product, blocks IL-2, IL-9 and IL-15, and orphan drug designation has been granted by the FDA. So the way we are having constructed to deal with Bioniz is as follows: So we have the option. We will have the readouts of the clinical data later this year. If we like the data, we will exercise the option. We will have all the global rights on BNZ-1. And in parallel, we'll immediately start a broader research collaboration with this company, and the idea is that they will bring to us 3 IND-approved molecules in dermatological conditions, which we will decide with working with their proprietary multiple-cytokine inhibition technical platform, and this should give us 3 additional candidates. What I forgot to say is also that BNZ-01 first indication is CTCL, but there are other indications that will come for this product, amongst others, alopecia areata, which is also a very severe disease in the field of dermatology. Now short touch point on the launches. So first of all, ILUMETRI, our biologic in psoriasis in Europe. You see there actually the data, the patient data in Germany month after month. And you see that we're actually tracking very, very nicely with the uptake. Just to situate you, the product was launched roughly 1 year after guselkumab and roughly 6 months before ustekinumab, so the 3 IL-23s. And risankizumab was launched in Germany, so about May, June last year. And despite the launch of risankizumab, you see that we continue to gain month after month patients on ILUMETRI, right? So this is certainly a very competitive space, but we think that we have a very good product. The longevity of action, we have 4 years long-term efficacy data. The product is extremely well tolerated. It is one injection by quarter, and we think that the IL-23s are going to be the winning class and that being in that class of the IL-23s, we will continue to grow the product very nicely. Skilarence is the oral drug. You may remember that there was a lot of use of DMF in Holland and in Germany. So we basically saturated those markets, and that shows the very nice growth of Skilarence. You should continue to see the product growing in the future, albeit in a more gradual pace because those 2 heavy DMF markets, Holland and Germany, have -- we have now market shares in those markets of about 80% to 90%. So, of course, much higher in those markets will be difficult. Last but not least, Seysara, our antibiotic in moderate to severe acne. So we have a very nice uptake of the TRxs. So we have already reached a 6% market share in TRx in the U.S. in the broad oral antibiotic market prescribed by dermatologists. We will continue to grow the brand and work hard this year in improving the gross-to-net ratios by dialing back on the co-pay card. Capital allocation. Well, obviously, it's clear that we have created to ourselves lots of opportunities. The ongoing launches, the upcoming launches like tirbanibulin, lebrikizumab, if we exercise the option with Bioniz, it's an orphan drug, this will be a quick development and much more to come into the pipeline. So we have to make sure from a resource allocation standpoint that we fund those opportunities for us to create mid- to long-term shareholder value. So we will not compromise in making sure that those opportunities are really maximized and sufficiently funded. Number two, obviously, continue to transform the R&D pipeline. We are absolutely not there yet, but we have really made very good progress in the last 12 months, and I have shown you some examples. We intend to secure a stable dividend to our shareholders, and we continue to be on the lookout for potentially accretive M&As because further increasing our critical mass in some businesses in some geographies would also have a very, I would say, a virtuous effect on our capabilities to launch the products and to bring them even further with all the opportunities that we have now created. In closing, I would just say that we think that strategic transformation at Almirall is now firmly underway; that we have a very good momentum for our key growth drivers, so European psoriasis franchise, Seysara in the U.S.; that we have made significant progress across the late-stage pipeline but also the preclinical pipeline, which I haven't shown you today, but also there, we have really made a lot of progress. And then finally, management remains firmly focused on additional external opportunities to generate sustainable value for our shareholders and future growth process. So with that, I thank you very much for your attention.

Okay. Well, good morning, and welcome to the Q&A session, which I'm willing to take any question.

I have a question on my side with all the recent views on [indiscernible] acquisitions that you announced lately, what do you see as your next key challenges for 2020?

Well, perhaps I'll start, and Bhushan and Mike, please chime in here. I think that -- I think the -- in the presentation, I alluded a little bit to it is that we've created really some very nice opportunities for us to create very significant mid- to long-term value. And the mistake we should not do is try to be very, very short-term oriented here. So contrary to 2019, it means that you will see some increase in SG&A, for example, for this year. Then the other thing I alluded a little bit to is the concept of core EBITDA, which is really nicely showcasing the underlying performance of the company, which continues to grow and which will continue to grow. But of course, it's also fair to say that the other income line will not continue to be at the same level as it is today. So I think it's important if you look at our numbers for the coming years that you really focus on top line, on top line sales, on core EBITDA rather than what you may have been looking at in the past other income. I don't know, Mike, if you want to add something.

Yes. I mean there's some things are going to happen in 2020 that are expected. And just to remind you, we have seen the launch of a generic of ACZONE 7.5% in the U.S., so we will see some impact there. As Peter mentioned, SG&A, we'll invest in these new product launches. We were aided a little bit in 2019 by the divestment of the aesthetics business in the U.S., which actually freed up resources. So that was part of the reason why we were able to keep the SG&A a little more in check in '19. And the other income, we'll be switching in 2020 from the more milestone-based income you've seen over the last couple of years from AstraZeneca to a pure royalty model, and you will see a change in that line.

Perhaps one comment I would add is I talked to you a lot about the dermatology business. We still have a decent business in Spain, which is very nice, which is very profitable. And you may know, we have a new government in Spain after lengthy debates and many attempts to have a government. And of course, we don't know what that government would keep as a surprise to pharmaceutical companies in terms of pricing or whatever measures they would take. So this is a little bit early to say, but hopefully, we'll know more a little bit later.

[indiscernible] I'm just wondering what [indiscernible] sort of competitive to Seysara, yes, whether you view that as competitive to Seysara and how you sort of are going to go about reducing the couponing going into next year and still retain the sort of nice market share you've got on the scripts.

Yes. So I didn't hear the first part of your question because you didn't have a mic, but you're talking about the new topical?

Yes.

Right. Okay. Yes. Bhushan, you [indiscernible] complete, but from what we know, the very vast majority of patients with moderate to severe acne are treated both with an oral and with a topical. So if anything, we think this product may take market share in the topical space, but we have never seen a new topical negatively impacting the overall oral antibiotic market. So the overall oral antibiotic market is a humongous market. It is completely flat despite the fact that there are some -- every now and then, you would expect that oral antibiotic market may be influenced by some guidelines, not to prescribe them too long, et cetera, et cetera, but in reality, we don't see anything of that. So Bhushan, anything you want to add?

Yes. Primarily, when a dermatologist is going to prescribe oral antibiotic, it is not for its antibiotic activity but for its anti-inflammatory activity. That's why our primary efficacy is like 12 weeks. So there is no competition per se because the topical is still used as an antibiotic, but sarecycline is not prescribed or used as an antibiotic but as an anti-inflammatory. That's why we think there should be no competition at all.

When do you expect to see the full Phase Ib CTCL data for BNZ-1? If you do that inside of [indiscernible], how would development's responsibilities begin?

So we expect to see the data early next year or late this year. When we see the data, we will know whether we will be able to go to Phase III straight-up in CTCL. And at the same time, we will activate Phase II trials in other indications that Peter just talked about like alopecia areata.

And you'll be handling that [indiscernible]?

Everything is -- but once we acquire, execute an option, the whole -- it's our responsibility.

[indiscernible] pipeline, is there still an interest in sort of later-stage product deals at this point?

Yes, absolutely. So I think we have to try to do both things at the same time. So building up the pipeline, late-stage assets, in-licensing, having our proprietary research product move into the clinic and at the same time, being on the lookout of acquiring an immediately accretive business in either some key geographies or some key areas. And every now and then, there are some assets that are shopped around, if I may say so, and we always take a look at that. We have absolutely the financial power to do those deals, and it would be very beneficial because if we could increase the critical mass of the company to even further levels in the future, it would actually be helpful to fund even better the innovation agenda. So the 2 go actually hand-in-hand.

Maybe just on Seysara, how should we think about gross to net in 2020? And how are you going to manage that transition in terms of reducing that?

Yes. So for Seysara, so we have actually, since this week, reduced the generosity of the co-pay cards. So what you should expect in the next couple of weeks is a decrease of prescriptions, but this is actually a good thing because we will get rid of the nonprofitable prescriptions. And then once we have a new level of profitable prescriptions, we will start to regrow from that new base but with very different gross to net assumptions. So that's really what we're going to try to achieve in 2020.

All right. What was the expectation for the time line to the clinic with the 23andMe [indiscernible]?

We will start preclinical talks in about a year for the parent. So they should be in the clinics late next year, definitely.

So this is also -- this is a bispecific antibody, so we're really proud with this deal to be the first one to be a customer of 23andMe. And there are very, very exciting things that they do with their databases, and we think that the potential clinical applications of that antibody is going to be very, very interesting. So we're very excited by that one.

Actually, just a follow-up on that. 23andMe has a separate collaboration with the CRO on TrialSpark. Is there any thought about patient selection using the management profile linked to 23andMe in order to [indiscernible]?

So that is definitely what we are thinking. When we start the clinical trials, that will be one of the ways that we will select the patients, select where the site should be because then you know where the patients are and also we know where the site has been. So you may choose a really appropriate site where you really get fast recruitment and treatment-naive patients.

[indiscernible] quickly, you highlighted that you were having some issues in the [indiscernible].

Yes, yes, yes. So actually, Ciclopoli in 2019 was relatively stable, and the 2 reasons for that were: Number one, we had some new competition in -- our partner, Menarini, had some new competition in Korea, which they are actually addressing as we speak, and we will see better numbers from that partner business in Korea. But the most important part is actually Germany where we are a market leader in what actually is a large market in onychomycosis in Germany. We continue to be market leader, but what we have seen in 2020 is that the overall onychomycosis market stabilized compared to 2019. And that was actually a different given compared to the previous years where we were looking at a very dynamic onychomycosis market. So we are confident for 2020 that we will again be able to grow Ciclopoli quite nicely, actually, by the mitigating actions, by new actions that we take in Germany to not only defend our market share but really continue to increase our market share. So moving forward, in 2020, you should see again a growth for Ciclopoli. Yes?

I just want to [ connect that to ] Seysara. There are some inherent challenges in [indiscernible] co-pay card. It's something you saw [indiscernible] with QBREXZA, broke that an uptake curve. And then you see the opposite, [indiscernible] is able to effectively keep volumes, will take the price. I guess, what are those challenges? And how do you plan on addressing them to make sure that Seysara practically is still strong?

Yes. Well, you saw it with QBREXZA, where, indeed, they had a temporary dip in the prescriptions, but then they started to grow nicely again from that new base. But basically, for us, it's quite clear that if we get rid of these unprofitable prescriptions, well, you will see them disappear. So it will have an impact quantitatively on that. So it all depends on moving forward or continue to increase your profitable prescriptions, get rid of the nonprofitable prescriptions, taking a little bit of a hit by getting rid of those nonprofitables. And then you have your new base on which you start to grow. To me, it would be surprising that -- so basically, what we're going to do is that for non-covered patients, our co-pay card will go up to $125, and that is, of course, a very high amount of patients to tolerate. And we do predict that the vast majority of those non-covered patients will not be ready to pay $125 for the drug and, therefore, walk away. And these prescriptions will simply disappear. There's no magic bullet to immediately replace them by an increase or an acceleration of the increase of the covered patients. You would need to have an acceleration of the increase of the covered to compensate for the non-covered that will be dropped.

[ This is just ] a follow-up, that is you're going to see it with QBREXZA but also [indiscernible] have a -- as a flatlining of the scripts once you pull back on the co-pay cards. I guess, how do you prevent the flatlining of scripts? How do you make sure it continues to grow?

By gaining market share in the covered segment. I mean -- so today -- remember, 6% market share is good, but it's 94% market share that we don't have yet, right? And of course, there's many opportunities for covered prescriptions in that enormous bucket. So it's really a matter of continuing to gain market share in the covered segment.

To what extent is the pre-biologics segment of atopic dermatitis or psoriasis in strategy [ in ] that area that you're working towards or...

Yes. Well, in Europe, for example, we have a very nice portfolio in psoriasis. Now we have an oral drug. We have a biologic. I didn't dwell on these products, but in many countries, we also have topical products for -- in psoriasis. So if we would have opportunities to build a similar portfolio in atopic dermatitis with our antibody, with perhaps some kind of topical solution, we would certainly look at that. As you know, there's a lot of oral JAKs who are developed in atopic dermatitis. I'm a little bit dubitative, to be totally honest, on the oral JAKs. They come with baggage on side effects, which makes me believe that the impact of oral JAKs will be reserved to some type of patients. I think dermatologists are a relatively risk-averse population. And so I think that really, really what's going to be the big bulk of the market is going to be the antibodies in atopic dermatitis rather than oral JAKs. Oral JAKs will take a place, but I don't think they will dominate the market. And then, of course, if there would be very good opportunities for, let's say, innovation in atopic dermatitis with a topical formulation for sure. I mean the issue with topicals is that from a pricing and reimbursement perspective, it's more difficult than a systemic drug. Prices for any topical in Europe are low. So typically, for topicals, you would look at the U.S. market. But even there, the market dynamics for pricing and reimbursement for topicals in the U.S. market have also fundamentally changed. So at the end of the day, it depends on the outcomes that the product would give you. But -- well, of course, lebrikizumab, we have to focus on Europe because that's where we have the rights. So if there would be a good topical available, we would definitely look at it for Europe, even for the U.S., but that's how the market in dermatology really shifts. It's -- with topicals, you -- it's difficult to get a decent price.

If you look at the scripts in the U.S., you can see that they've kind of -- after being sort of resilient at the beginning, have now started to kind of tail off and lose share to [ Skilarence ] so on. And so just wondering if you think what the differences are between the U.S. and European landscape and how you can kind of prevent a similar trend.

So -- well, it's rather a question for Sun Pharma, so I will not comment on what Sun Pharma is doing in the U.S. The only thing I can tell you is that we have seen no deceleration of our capability of getting new patients on ILUMETRI even with the launch of risankizumab. As I told you in my speech, I think that if you would talk to KOLs, I would say that 90% of KOLs would admit that IL-23 is the way to go for the vast majority of psoriasis patients and that the IL-17s or even the TNF alphas are still the product of choice for PsA patients. In the totality, let's say, it's about 30% of patients who have PsA and PsO, right? So it means that in 70% of the cases, call it the pure PsO patients, IL-23 is the way to go. And I think that those ships will all rise with the tide. I'm not going to say that we're going to take 60% market share in the IL-23, but that market is so big and so dynamic that even with a decent market share, you can really have a very nice revenue coming your way. So if I look at the other markets, we have launched in Austria. The product is doing well. We are launching now in Spain, our home market, where, of course, we also benefit from the -- I call it, the Almirall effect in Spain. And we are opening hospital after hospital or clinic after clinic. That's the way it works in Spain. And again, we see a very nice uptake in the months of November and December with ILUMETRI. U.K., like always, a very small market. Even if you go through NICE, you have to open CCG by CCG, but that's exactly what we're doing. And actually, NICE has recognized ILUMETRI as the most cost effective of the IL-23s. So of course, we're leveraging that. So it's not only Germany. It seems to be a pretty homogeneous performance. So we are actually -- as we speak, we're talking to the French authority. So we have had the first meeting with the CEPS. We will -- we have submitted the file for the Transparency Commission in France. And we have some kind of fast route approval for ILUMETRI in France, a kind of a cost minimization approach, which would, if everything goes well, allow us to launch the product also in France by probably September this year. And France is a market where if you get to the Transparency Commission, which is a big challenge, it really is a big market for innovation. French doctors still embrace innovation. And I think that if you have a good position in Germany, a good position in France and a good position in Spain for biologics, you can really make a decent living out of it. Yes.

How should we think about bridging to core EBITDA growth for 2020 as other income is lower? And what are the offsetting growth areas?

Mike, do you want to take it?

Yes. So I think we talked a little bit about the factors in the opening. You're going to continue to see the growth of these new launches. You're going to, of course, have a little bit of an offset with the ACZONE generification. We will lose some sales there. And then you're going to probably see a little bit of a need to invest. So it's too early to give you any kind of guidance for 2020, but if you take all those things into consideration and you think that the other income is also going to start to dissipate over time, you're going to see that 2020 will potentially have a little bit of pressure on it. But in the midterm, we've got a great growth profile. So I think at the core EBITDA level, I think we'll manage that as best we can, and then the other income is really just an artifact of the history, and you're going to start to see that decline over the coming years.

Just on the gross margin, because you made some quite nice progress earlier on in the year, but then you had some of these provisions, which sort of offset that, so how should we sort of think about the natural run rate of gross margin going into next year with the genericization of ACZONE? And are there any other big sort of drivers, positive or negative, we should think about?

Yes. I think the ACZONE is going to be the biggest impact on the gross margin. Of course, the new launches, the biologics, are a little bit in a better margin shape. So overall, we're looking at trying to keep it relatively steady. And then in the future, as you get out into the midterm with the new products taking more and more of a share, you should start to see an improvement in the gross margin.

[indiscernible] think about the decline in the generic one?

So the -- this is an authorized generic, so we have a settlement with the first filer, [ Tivo ]. And of course, I cannot disclose the details of that settlement, but we will have some kind of royalty on their net sales, which means that you will see part of that loss of ACZONE compensated in other net sales. So I can't really say much more than that. Okay. I'm seeing signs that we should stop. So thank you very much for your very good questions. Thank you.

Thank you, everyone.

Thank you.