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

Good day, and thank you for standing by. Welcome to the Almirall 9 Months 2024 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Pablo Divasson. Please go ahead.

Thank you very much, Sonia. Good morning, everyone. Thank you for joining us for today's quarterly earnings update and review of Almirall's 2024 9 months financial results. As always, we are showing the slides we are using today in the Investors section of our website at almirall.com. Please move to Slide #2. Let me remind you that the information presented in this call contains forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause actual results to materially differ from what we are sharing today. Please move to Slide #3. Presenting today are Carlos Gallardo, Chairman and Chief Executive Officer; Mike McClellan, Chief Financial Officer; and Karl Ziegelbauer, Chief Scientific Officer. Carlos will start with the business highlights covering the first 9 months of 2024 and will also give us an update specifically on our biologic portfolio as key growth drivers in our medical dermatology portfolio. Karl will provide you with an R&D status update, highlighting the progress of our pipeline. And Mike will then talk you through the financials before Carlos close, and we open up for a Q&A questions. I invite Carlos Gallardo, our Chairman and CEO, to summarize our 9 months business overview. Please move to Slide #5.

Thank you, Pablo, and hello, everyone. It's great to be here with you today and talk you through what has been a continued strong performance of Almirall in the first 9 months of the year 2024. We have achieved solid results up until end of September, delivering a net sales growth of almost 8% to a total of EUR 728 million with an EBITDA growth of almost 3%. This strong performance is fully in line with our expectations for the year, and we, therefore, reiterate our guidance for the full year. Our biologics portfolio remains a key driver of our continued business momentum, thanks to the executional excellence of our teams in the markets, which also enabled us to achieve continued growth of our broader product portfolio beyond biologics. The balanced performance of our dermatology product portfolio with a focus on biologics continues to support and grow our leadership in medical dermatology. In 2024, we continue to focus on the launches and the growth of Ebglyss across the European markets. Our launch schedule of Ebglyss is on track, and we are seeing strong momentum of the product, particularly in Germany, where Ebglyss is already established and is helping patients every day. We're also pleased with the progress of our medical dermatology R&D pipeline, which consists of a broad portfolio of assets that are designed to address significant unmet needs and are based on our leading scientific and technology expertise. Over the first 3 quarters of the year, our business performance has continued to be driven by our European dermatology business. In Europe, we have seen our growth accelerate throughout the year, led by the strong performance of our biologics portfolio and the continued growth of our broad medical dermatology brands. The majority of our growth comes from our most recently introduced products, which is a testament of the commercial excellence and executional strength that we have in our country teams. Let me explain this in more detail. Ilumetri, our biologic product for psoriasis, continues to deliver strong performance and has become an important product in medical dermatology. This is a testament of our team's commercial excellence and our company's ability to achieve market success within the segment. Since launching Wynzora and Klisyri in Europe, our presence and market share in medical dermatology have expanded significantly, particularly in key countries such as Spain, Germany and Italy. We are very encouraged by the positive development of the Ebglyss sales performance at this early stage of market rollout. We have now launched in Germany, Norway, U.K., Spain, Denmark and the Czech Republic, and we are on track with our preparation of upcoming launches. I'll go into more details of Ebglyss later. Progressing our R&D pipeline is at the heart of our company strategy, and we are pleased with our recent steps ahead of advancing our pipeline throughout the first 9 months of the year. We have achieved 2 milestones in our late-stage pipeline recently. After the FDA approval, we have already launched Klisyri large field in the U.S., which gives dermatologists a powerful alternative to treat patients with larger areas affected by actinic keratosis. In Europe, we have recently completed the decentralized regulatory procedure for Efinaconazole, which is a complementary asset to treat onychomycosis and especially persistent condition that still has significant unmet need. In the early-stage pipeline, we have also made significant progress in the year-to-date. This is the basis for us to drive future growth of our medical dermatology business. Karl will give more details on our pipeline progress in a little while. In addition to our current pipeline assets, we continue to evaluate external opportunities across the early and mid-stages of clinical development. Our strategy continues to focus on assessing collaborations and agreements based on the scientific, strategic and financial parameters. Our close collaborations with the medical community are a cornerstone of our strategy and embedded in the heritage of our company. In addition to our many direct interactions through our teams across different functions, our conference presence is central to that approach. This year, we had a strong presence at the 33rd Congress of the European Academy of Dermatology and Venereology, EADV in Amsterdam, which was focused on our biologic portfolio and was a key activity to support the launch of Ebglyss. We presented 34 abstracts detailing the latest research on lebrikizumab for moderate to severe atopic dermatitis in adolescents and adults. In lebrikizumab, and Almirall calcipotriol betamethasone cream for moderate to severe plaque psoriasis in adults as well as tirbanibulin for actinic keratosis. In October, the results of 2 additional studies related to Ebglyss were presented in the full clinical conference. Karl will explain this important data in more detail later in the call. Please move on to Slide 7 for an update on our biologics portfolio. Let's dive a little deeper into the continued strong performance of Ilumetri, our anti-IL23 biologic for psoriasis in Europe. Ilumetri has grown in line with our expectations and now holds a strong position and continues to gain market share in key countries across Europe. In the first 9 months of 2024, Ilumetri grew 25% year-on-year, reaching sales of around EUR 153 million. As usual, we experienced a recurring summer seasonality, but sales still reached a robust EUR 52 million in the quarter. The anti-IL23 class not only continues to lead in advanced therapies within the dynamic psoriasis market, but it is also the fastest-growing class within the psoriasis market. This strong performance is an excellent basis for Ilumetri continued growth, along with a balanced performance across the different countries in Europe. Germany continues to be the strongest market for Ilumetri. And in addition, we are seeing strong growth in other European countries, reaching important market milestones. For example, Ilumetri is now the leader in the dynamic market of branded biologics for psoriasis treatment in Italy for the first time. Also, the recent launch of the 200-milligram option for Ilumetri gives dermatologists a unique opportunity to treat a broader segment of patients and also to contribute to increase Ilumetri's market share. Additionally, new real-world evidence on the performance helps drive awareness of the strength of Ilumetri. We presented new 52-week interim data on the positive study at the September EADV Congress, demonstrating the improvement in overall well-being of patients with moderate to severe psoriasis in addition to the improvement of the physical symptoms. Having achieved a run rate figure of EUR 200 million based on September sales, we remain confident in achieving the EUR 250 million peak sales target. Please move on to Slide 8 for an update on the Ebglyss launch, our new biologic treatment for moderate to severe atopic dermatitis. We are very pleased with the progress of Ebglyss in the first 9 months of 2024. The strong performance of Ebglyss shows the potential of the treatment to impact patients and the opportunities this creates for us as a company. This performance is testament to the product and to our focus on launch excellence across our key markets. Ebglyss continues its positive performance trajectory. In quarter 3, it grew 34% quarter-on-quarter, reaching a sales total of EUR 10 million and delivering 9-month sales of just over EUR 20 million. Please note that this EUR 20 million are mainly German sales. Although we have already launched Ebglyss in other countries, we're still going through the market access phase to get the product in the hospitals. So there is a limited amount of sales coming from these remaining countries as of today, as expected. The awareness of Ebglyss amongst health care professionals has increased significantly since launch and is further growing on a quarterly basis. Prescriptions to treat moderate to severe atopic dermatitis in Germany are steadily increasing with Ebglyss continuing to gain significant share in the dynamic market segment. Overall, we are very proud of the feedback we continue to get from patients and physicians about the product. Ebglyss continues to grow with a strong position in the market and demonstrates its role as new first-line treatment based on the strong efficacy and favorable safety profile. Let's move on to the next slide, please. Our Ebglyss launch plan in Europe is on track, and we are pleased with the significant progress we have made this year already since the launch in Germany in December 2023. After our launches in Norway and U.K., we have recently made Ebglyss accessible in Spain, Denmark and Czech Republic, where the product is available for commercial reimbursement. Most recently, we have also received regulatory approval of Ebglyss in Switzerland and expect a reimbursement decision in 2025, in line with the standard process timing in Switzerland. We are now anticipating that Ebglyss will be available in Austria at the beginning of the next year instead of late 2024. Also, in 2025, we will focus on rolling out Ebglyss in the remaining European countries. We will, of course, keep you updated on our progress in these launches. After receiving the FDA approval in the U.S., our partner, Lilly has recently launched in the U.S., Canada, Japan, United Arab Emirates, which demonstrates the potential of the brand to become a global powerhouse in the treatment of AD. The growth of Ebglyss is further supported by ongoing clinical trials, additional launches and by the opportunity to generate real-world evidence of the impact of the product. Next, please move on to Slide 11. I invite Karl to give us an update on the positive progress in R&D and our pipeline.

Thank you, Carlos, and good morning to everyone on the call. This slide now shows you the progress of our pipeline. In October, we have successfully completed the decentralized regulatory approval procedure for Efinaconazole in Europe. We expect to give an update on the product commercialization plan later this year. The successful completion of the decentralized procedure is the final step before national marketing authorization can be granted by European countries. Work with the national regulatory authorities is now underway and marketing authorization are expected within the first half of 2025. Sarecycline's regulatory review in China is still ongoing. Post-COVID time lines are more volatile for regulatory procedures in China, and we expect now approval in the second half of 2025. After receiving FDA approval addressing Klisyri's expansion to large field in June, we have successfully launched in the U.S. We are currently running a clinical study to enable the label expansion to large field in Europe, aiming to launch in 2026. Together with our partners, we continue to work on expanding the labels for our key products, Ilumetri and Ebglyss. We expect our partner, Sun Pharma, to complete the INSPIRE II study by the end of this year. INSPIRE II is a Phase III study assessing the efficacy and safety of tildrakizumab compared to placebo in anti-TNF alpha new subject with active psoriatic arthritis. Our partner, Eli Lilly is running a Phase III study exploring the safety and efficacy of lebrikizumab in patients 6 months to younger than 18 years with moderate to severe atopic dermatitis. Clinical supply manufacturing for anti-IL21 monoclonal antibody is ongoing to prepare for Phase II. IL21 is a cytokine involved both in B and T cell biology and hypothesized to be involved in several immune-mediated skin diseases. For our anti-IL-1RAP monoclonal antibody, we have completed Phase I single and multiple ascending doses in healthy volunteers. Now pharmacokinetics and safety are exploring patients. This anti-IL-1RAP monoclonal antibody plus signaling of sick members of the IL-1 cytokine family and has potential utility in several autoimmune skin diseases. For our IL-2 mutant fusion protein, Phase I single and multiple ascending doses are ongoing. This IL-2 mutant fusion protein is aimed to activate regulatory T cells with the potential to treat various autoimmune diseases. ZKN-013 is an oral readthrough inducer designed to overcome nonsense mutations that cause premature stop codon. ZKN-013 has potential utility in several rare indications, such as dystrophic epidermolysis bullosa, junctional epidermolysis bullosa and familial adenomatous polyposis. Phase I is ongoing. In summary, we're making very good progress with both our early and late-stage pipeline. Let's move to Slide 12. At the EADV Congress in September this year, we presented new long-term data from the lebrikizumab ADjoin long-term extension study. For the first time, data from 3 years of treatment were presented. High levels of maintenance of response were seen in patients that responded to lebrikizumab in the monotherapy trials ADvocate 1 and 2 and entering the long-term extension study ADjoin. Patients taking lebrikizumab who completed 52 weeks in ADvocate 1 or 2 could enroll in ADjoin for an additional 100 weeks of continued treatment. Patients either received treatment with 250-milligram lebrikizumab every 2 weeks or every 4 weeks. The approved maintenance dose of lebrikizumab is 250 milligram every 4 weeks. 84% of patients taking lebrikizumab once a month and 83% taking lebrikizumab every 2 weeks maintained clear or almost clear skin at 3 years. 83% of these patients taking lebrikizumab once a month and 91 taking lebrikizumab every 2 weeks did not require high potency TCS or systemic treatment as rescue therapy. The safety profile of lebrikizumab in ADjoin was consistent with previous lebrikizumab studies in patients with moderate to severe atopic dermatitis. These data show that lebrikizumab can provide long-term disease control throughout 3 years of continuous treatment and support our positioning of lebrikizumab as first-line treatment for patients suffering from moderate to severe atopic dermatitis. Please move to the next slide. At the Fall Clinical Dermatology Conference last month, our partner, Eli Lilly, presented clinical data exploring lebrikizumab in atopic dermatitis, skin of color patients and patients pre-exposed to dupilumab. This slide shows data from skin of color atopic dermatitis patients. Lebrikizumab showed significant improvement in atopic dermatitis signs and symptoms after 16 weeks of treatment. Most patients achieved a 75% or greater improvement in skin clearance along with reduced itching and an enhanced quality of life. The safety profile of lebrikizumab was consistent with what we observed in the ADvocate 1 and 2 Phase III trials. In summary, lebrikizumab demonstrated meaningful improvements in skin clearance and itch relief for most patients with skin of color suffering from moderate to severe atopic dermatitis. Next slide, please. This slide shows the results from the Phase IIIb ADapt study. The ADapt study evaluated the efficacy and safety of lebrikizumab in 86 patients with moderate to severe atopic dermatitis who were previously treated with dupilumab. To qualify for ADapt, patients must have discontinued dupilumab treatment due to inadequate response, intolerance or an adverse event or other reasons, including cost or loss of access to the medicine. Similar to the results of the Phase III monotherapy trials ADvocate 1 and 2 in patients without clear exposure to medication for moderate to severe atopic dermatitis, 57% of patients at week 16 and 60% of patients at week 24 who were previously treated with dupilumab achieved EASI-75. In addition, patients in this study showed improvement in difficult-to-treat area. For example, more than half of patients treated with lebrikizumab showed clear or almost clear face dermatitis at week 24. In summary, together with the results of ADvocate 1 and 2, the data support the potential of lebrikizumab as a first-line treatment in different patient population suffering from atopic dermatitis. With that, I will hand over to Mike for the financial review.

Thank you, Karl, for the overview of the exciting new data and progress of our R&D pipeline. As Carlos mentioned, we delivered a solid performance through the first 9 months of 2024 with a net sales growth of 7.9%. We're very pleased to continue our strong growth trajectory in the European dermatology portfolio, which helped us drive the overall net sales. These results are a key cornerstone on our journey to become a leader in medical dermatology. We achieved a total EBITDA of EUR 142.2 million in the first 9 months of 2024, up 3% versus the first 9 months of 2023. This was driven by our sales growth and partially offset by higher launch investments in SG&A and pipeline investments in R&D. Our gross margin came in at 64.8% of sales despite the effect of increased royalties from Ilumetri and is in line with our guidance for 2024. SG&A through the first 9 months of 2024 is up 9% to EUR 345 million. This is mainly due to recent and upcoming Ebglyss launch investments to further support the growth trajectory of the brand. R&D investment is up 14.9% year-on-year, representing 12.4% of net sales, in line with our annual target that is based on our pipeline and future growth strategy. We ended the first 9 months of 2024 with a net debt-to-EBITDA ratio of 0.3x. This gives us a strong basis for potential licensing or bolt-on M&A opportunities. Let's move to the detail of our sales on Slide 17. The net sales dynamic in the European dermatology business showed a very strong performance with 22% increase year-on-year that I'll review in the next slide. Our general medicine and OTC businesses in Europe showed a slightly softer performance compared to 2023. That includes the impact of minor divestments in 2023 and a downward trend for Efficib/Tesave, which were partially counterbalanced by good Almax performance and the inclusion of Prometax in Spain. Our U.S. business saw a slight decline in 2024 with some products recovering through the year. I'll share more details on that in the next slide. Rest of the World General Medicine is down as the good performance of Ebastel was offset by the discontinuation of some minor products and a normalization of [ ImmunRx ] versus a very strong 2023. Let's take a closer look at the dermatology business on the next slide. Our European Dermatology segment continues to show a strong performance with Ilumetri as the primary driver. Other growth drivers such as Klisyri and Wynzora are making progress with their launches in key European markets. Ebglyss has achieved EUR 20.4 million in sales after 9 months on the market, which is consistent with our expectations and continues to strengthen our confidence in its strong growth trajectory. Ciclopoli and Skilarence showed slightly lower sales due to high competition in their spaces. The U.S. business is stabilizing with Seysara sales recovering in Q2 and Q3. The positive impact of the recent large field launch for Klisyri in August is not yet visible in the data, but the overall volume is growing since the launch. The U.S. legacy business remains under pressure from ongoing generic impacts for Cordran and Tazorac. However, Aczone sales have recovered slightly. Rest of the World Dermatology sales were down due to the non-recurrence of the 2023 licensing upfront payment for Finjuve in Korea and the Cordran Tape partner supply in Japan. Now let's move to the complete financial statements. Let's focus on the rest of the P&L, starting with a detailed review of some of the highlights previously mentioned by Carlos. The gross margin came in at 64.8% in the third quarter. We will continue to face margin pressure due to higher sales mix and higher royalty tiers as we continue to achieve higher sales levels for Ilumetri. We have further increased our R&D investments versus the first 9 months of 2023, landing at 12.4% of net sales. We expect the full year figure to land in a similar range of sales, supporting our innovation and pipeline strategy. We have increased SG&A investment by high single digits compared to the first 9 months of 2023, and we expect this trend to continue next quarter as we focus on successfully executing the Ebglyss launch in more markets. Net financial expenses were lower year-on-year, influenced by interest from short-term deposits and a positive equity swap valuation. Just a reminder, our effective tax rate is affected by the U.S. losses, which are not deductible against our profitable European business. We expect 2024 to land in the mid-60s in terms of effective tax rate, decrease somewhat in 2025 to the mid-40s and then revert back to a normal low to mid-20s rate in 2026 and beyond. Please move to the next slide to look at the balance sheet. The primary highlight on the balance sheet is the effect of the recent investments in intangible assets, including the EUR 10 million upfront payment for the IL-21 asset from Novo Nordisk and a smaller upfront for the readthrough inducer asset from Eloxx Pharmaceuticals' in-licensing deal. In the third quarter, we had an additional minor investment related to acquiring the remaining Klisyri global rights. The total impact of intangibles has been offset by the recurring amortization. Importantly, our net debt ratio continues to be very favorable at 0.3x despite significant cash outflows through the first 9 months, which we will look at more detail on the next slide. We delivered operating cash flow of EUR 106 million in the first 9 months of '24. This represents a substantial improvement versus the first 9 months of 2023 as we've effectively stabilized our working capital this year. Other adjustments here are mostly related to net financial income, including interest from the short-term deposits and a higher equity swap valuation. Our investing activities notably include cash outflows in the first 9 months, mostly related to 2023 milestones paid in the first quarter of '24. In January, we incurred a EUR 45 million payment for achieving the first commercial sales of Ebglyss in the EU from the late 2023 launch. Additionally, we have paid a EUR 20 million milestone related to Ilumetri sales as we've achieved higher targets. The remaining payments include some additional in-licensing payments related to agreements I mentioned earlier. The divestment line refers to milestones and royalty collections from AstraZeneca and Covis. These have been classified under investing activities due to the reduced focus in our operations and are lower in 2023 based on the agreed schedule. With that, let me please pass back to Carlos to conclude the presentation.

Thanks, Karl and Mike. As you have seen, we have continued our strong performance over the first 9 months of the year, and we are happy to reiterate our guidance for the full year today. Achieving a net sales growth of 8% to a total of EUR 728 million and an EBITDA growth of 3% means we are on track to achieve our business ambition and further cement our leadership in medical dermatology. We see continued strong performance of our differentiated dermatology products, which enables us to reach more patients and make a real impact on their lives. Our capabilities allow us to be successful commercially, grow our market share and progress exciting opportunities in our R&D pipeline, which creates the potential for continued growth in medical dermatology. We continue to make significant investments in our key products. Ilumetri growth path remains solid and shows continued momentum to achieve future growth milestones. Its strong performance is a good indication for us achieving Ilumetri's peak sales target. We anticipate the positive trends of Klisyri and Wynzora to continue as we make them available to more patients in Europe. We are also very confident in the progress of our Ebglyss launch as our strong achievements in 2024 have demonstrated. In Germany, we saw key growth in the year. And in next year, we expect sales to take off in the remaining countries once we complete market access. Our strong partnership with the dermatological community is central to achieving leadership in medical dermatology by reaching more patients and enabling them to benefit from our products. The highly positive feedback from the medical community and our strong business performance continue to set us up for success on our journey of leadership in medical dermatology. Our leadership is also going to be secured by the strong progress we are making with our R&D pipeline, pushing the boundaries of science and technology, especially with the work on our exciting early-stage assets. This is our clear sign of our dedication to the medical dermatology sector. In the year of the 80th anniversary of our company, we are proud of the impact we have on people. What makes us unique is the combination of our long-term business vision and our focus on medical dermatology, science and innovation. The strong performance of our teams across the organization enables us to create and execute powerful opportunities through in-house development, collaborations and partnerships and strong commercial execution. With this, we conclude the presentation, and I hand it back to Pablo for the Q&A session.

Thank you very much, Carlos. Sonia, back to you for the Q&A, please.

[Operator Instructions] The first question comes from the line of Lucy Codrington from Jefferies.

Just a couple. I was just wondering if you could give us some more detail on how we should think about the Klisyri large field launch just in terms of the dynamic of that kind of uptick we might see? Is that something we could see as early as 4Q? Or will that take longer? How much education is required? And are you expecting any erosion of the kind of small field use? And then secondly, just in terms of the feedback so far from the Ebglyss launch, just any commentary on how many patients are managing to get to the 4 weekly maintenance dosing? I gather that your competitor has been saying that it's a minority, but I don't know how accurate that is. And then just related to that, just in terms of the admirable results, any chance you could put those into context of what has been seen with other treatments? And are these differentiating for lebri?

Thank you, Lucy, for your questions. In terms of the Klisyri large field launch, we are seeing a very good trend. And I can confirm that it's additive to a small field. We are seeing no or very little cannibalization. It's early days to confirm further data on how we can expect, but it's very encouraging what we're seeing. And we are very excited about giving HCPs a new field alternative for patients that might not be eligible or before cardiotherapy. In terms of Ebglyss, everything that we are seeing around Ebglyss is very positive. On markets where we already have launched, we see great penetration in terms of dynamic market share, well ahead of all our players with the exception of Dupixent. And in countries where we are still in market access, we are getting the price that we wanted, in some cases, earlier than we expected. And overall, the feedback we're getting from HCPs and from dermatologists is very, very positive. So I'm very encouraged about the Ebglyss trajectory so far. In terms of your question about the ADmirable results, let me pass this question to Karl, and I'm sure he will give you a better answer than myself.

Happy to answer the question. The ADmirable study explored the effectiveness and safety of lebrikizumab and skin of color patients. And we're seeing similar activities as in other clinical studies in different patient populations. So this just confirms the excellent profile of lebrikizumab seeing activity in different setting in different patient population, either in monotherapy or in combination and support our positioning as a first-line treatment for moderate to severe atopic dermatitis.

[Operator Instructions] And the next question comes from the line of Alistair Campbell from Royal Bank of Canada.

Two, if I can. First of all, just on Ilumetri, EUR 250 million as a peak estimate does seem a bit conservative given current run rate. So just any reason why you stick to EUR 250 million? Are you sort of concerned about changes in the marketplace, for instance, biosimilars emerging? And then just on the U.S. business, it looks like it's beginning to stabilize and your guidance on tax rate suggests moves towards breakeven within a couple of years. But what is giving you confidence that, that is a business that has long-term positive value? And how are you going to go about releasing that value?

Thank you, Alistair, for your questions. Ilumetri, we're very pleased with the trajectory for Ilumetri. And as I mentioned before, we are not only having the back winds of being in the class that has proven to be the more efficacious class in the treatment of moderate to severe patients and it is the preferred -- the go-to products or the go-to category for the treatment of these patients, but also we're seeing that Ilumetri is gaining market share in a number of countries. So very encouraged. So very comfortable with the peak sales that we mentioned, and we hope to do more. The U.S. where we have a tremendous opportunity to generate value in Almirall in the short term in Europe with the introduction of the biologics. Of course, the U.S. remains a very important market for us in our quest to -- for leadership in medical dermatology. Very encouraged now with the launch of the large field that, as you say, is stabilizing the operations there. We continue to see this trend to continue in the U.S., and we will be looking for further opportunities to strengthen the business there. We see it as a key market going forward, a very large market, the largest market in medical dermatology. And we have an exciting R&D pipeline, which has global rights.

[Operator Instructions] And the next question comes from the line of Alvaro Lenze from Alantra Equities.

I just wondered if you could share the dynamic market share that you're seeing in some of the countries where you have launched like Germany? My second question would be on Efinaconazole, if you could maybe give us some indication of ballpark number of what contribution could we expect from this? And then my third question would be if you could provide some color on costs going forward, just to understand how much of the increase that we have seen over the last few years is just a step-up that it's here to stay to sustain the revenues or the sales effort for Ebglyss or whether there is some to this cost that is temporarily related to purely launch costs?

Thanks for the question, Alvaro. In terms of Ebglyss performance in the countries where we have full access, such as Germany, we are very happy with the trajectory. We're well into the double digits market share. We are ahead of any other product with the exception of Dupixent and the trajectory and the trend remains very favorable and according to our expectations. So very pleased with that. In terms of Efinaconazole, Efinaconazole is probably the best-in-class treatment for onychomycosis. This is a disease where there's still a lot of unmet need remaining. So very pleased to have this product on our portfolio, very consistent with our ambition to have a broad product portfolio serving all the needs -- the existing needs of patients and dermatologists. But please note that this is a market that is largely out of pocket, so over the country in the majority of countries in Europe. We are still analyzing what it means for us, how -- what's going to be our go-to-market model. So -- but it's not going to be a significant contributor to our P&L. It's going to be great for patients. It's not going to be a significant contributor for us. And we are still deciding which countries and how do we launch it. In terms of the cost question, Mike, can you take it, please?

Yes. Thanks, Carlos. So Alvaro, I mean, the way that we've kind of looked at the SG&A investment, most of the incremental you're seeing this year is coming from the Ebglyss launch and from the pressure on salaries for all the employees. And those are things that will continue. As we move forward, we'll see another significant increase next year, less than the sales growth, but still because we need to invest in several of the other countries coming online. In the midterm, we should start to see that moderate. And I would say SG&A growth will come back down to the low single digits from '26 and beyond, whereas the sales growth should accelerate because of all the impact of the Ebglyss launch plus the continued growth of the rest of the portfolio.

Maybe I'll follow up on that. So you confident on returning maybe to the mid-20s EBITDA margins in the next couple of years or maybe it's more long-term target?

Yes. I think that's a reasonable midterm target. I mean the trajectory this year was kind of going to be the bottom of the EBITDA margin. We are expecting EBITDA growth, as you see in our guidance that we've reconfirmed. Next year, we hope to get a little bit of expansion and then to accelerate that in '26 and beyond. So I'd say in 3, 4 years, a mid-20s EBITDA margin is a nice target.

[Operator Instructions] And the next question comes from the line of Jamie Escribano from Banco Santander.

So my first question is regarding the Dupixent experienced patients trial. So what could we expect in terms of commercial impact of this trial going forward? The second question would be -- regarding the CapEx for 2024, if you can remind us ordinary CapEx plus milestones and others. How much should we have for this year? And the third one on Ilumetri. So it keeps growing at around 30%. Maybe you can elaborate a little bit more on the drivers of this growth. Is it that you keep growing or gaining market share in existing countries? Is it that you are launching in new countries? Is it that the whole category of psoriasis biological products for psoriasis is growing and as a result, everybody is growing. So just to have a little bit more color. And finally, on competition, if maybe you want to be conservative on your 250 peak sales target because you see more competition coming in following years?

Jaime, thank you very much for your question. So on the first question about the new data that we have on Ebglyss is very encouraging. We believe that this is a first-line product. This is how we are positioning it. where it's arguably the best product for the treatment of moderate to severe patients. In the markets where we have market access such as Germany, the majority of patients are coming from first line. So very consistent with the strategy and this positioning, very good news. And this studies that Karl was referring, both the one with Dupixent, Ebglyss patients and the one with skin of color contributes to the body of evidence of the great efficacy of Ebglyss of the product that we have in our hands. So again, it just builds into the evidence that is arguably the best product to treat patients first line for moderate to severe atopic dermatitis market. I will take the Ilumetri question, and then I will pass it to Mike for the CapEx question, okay? So Ilumetri growth drivers of growth. First, the entire category is growing. As a reminder, although there's been advanced treatments for these patients for many years and some even more than a decade now, still is a population that is severely undertreated. Only around 22% of eligible patients to be treated with advanced therapies are treated with advanced therapies. So there's still more than 75% of patients that are out there. It's a pool of patients out there that could be treated. So that's also one dynamic that is already pushing the growth in this category. Within this category, we have the anti-IL23s that are becoming the go-to category to treat these patients in Europe. And then -- if you look into Almirall, first, we did launch recently in some markets such as the Nordics. So that's contributing to the growth, of course, compared to previous years. But more importantly, 2 things that I would like to highlight. First, we have launched a 200 milligram. We are the only product in the category with this dose flexibility that allows patients -- sorry, that allows practitioners, dermatologists to achieve their treatment goals without deviating from Ilumetri, thanks to the extra dose. In addition, we are getting extremely robust real-world evidence. So the more they use the product, the more they like it, and this is contributing to them using it more and more. And in terms of the future, we expect the class to continue to grow in the coming years, and we expect Ilumetri to continue to grow with Ebglyss.

Yes. So in terms of CapEx, if you look at 9 months year-to-date, we've had ordinary CapEx of about EUR 46 million. I would expect that to annualize on that kind of a run rate, somewhere in the EUR 60 million range. In terms of investments, we've been at EUR 96 million through 9 months. I don't expect a lot more in Q4, so maybe another EUR 10 million there. Overall, cash outflows from investing activities when you net everything together, were EUR 124 million at the 9 months, and I would expect it to land in the EUR 140-ish million range, plus or minus a little bit.

Okay. And maybe a follow-up question. Well, maybe a more spicy one, but -- and I know you are doing the budget for 2024. But consensus is more or less for 2025 in EUR 225 million to EUR 230 million EBITDA with an implied margin of more or less 21%, maybe a little bit more. How comfortable you are with this number? Do you think this is something that could go in line with your budget or is maybe a little bit high, building on what you mentioned about the OpEx for next year?

Thanks, Jaime. I'll leave it to Mike as well to answer this one.

Yes. And of course, we'll give you our guidance for 2025 in February. But let me just confirm some of the trends that we're seeing. So that will help you a little bit in your mindset when you're looking out there. We've seen good sales growth. I would expect sales growth to accelerate next year. We were expecting high single digits this year. So that probably puts us over the double-digit bar. Gross margin, we might see a little bit of pressure there because of the royalties I mentioned earlier in the mix. So maybe 50 basis points there. R&D, probably a similar percentage of net sales. That's kind of our commitment at this point. SG&A, we will see some growth, probably not as much as the sales percentage growth, but we will see additional investment for the Ebglyss launch continuation. And then at the EBITDA margin, we'd like to see a little bit of accretion. How much -- we'll give you a better idea when we come back in February, but we want to see a little bit of margin accretion in 2025. Hopefully, that helps you.

[Operator Instructions] And the next question comes from the line of Guilherme Sampaio from CaixaBank.

So the first one on Ebglyss, just putting into context what you just mentioned regarding the guidance for 2025 and the consensus expectations for Ebglyss. So for this year, you're expecting about EUR 35 million revenues for next year, almost EUR 100 million. This is the run rate that you expect for these 2 years or something else contributing to your growth expectations? And secondly, regarding M&A, if there's something in pipeline over the short term that we might be seen enough?

Thank you, Guilherme, for the question. So Ebglyss, as I mentioned before, we are very pleased with what we're seeing. We are seeing that the product is being established in first -- the majority of patients coming from naive patients, first line, everything is going according to our plans. Our long-term guidance is the EUR 450 million peak sales. We remain very comfortable with this estimate for the time being. So in terms of future years, a continued growth rate towards this peak sales ambition. In terms of M&A, we have a strong track record of partnering and M&A, we continue to look for, of course, exciting opportunities. The main focus now is licensing, as we've mentioned many times, looking for early-stage opportunities to add to our already exciting R&D pipeline, also later-stage opportunities, so beyond proof of concept, Phase II, Phase III. And for bolt-on, so nothing transformational in terms of M&A, bolt-on opportunities that we can -- opportunities that we can fit nicely in existing infrastructure either in European countries or in the U.S.

As there are no further questions, ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.