Formycon AG (FYB) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Formycon AG Earnings Call on the 9 Months Results 2024. We have the CEO, Dr. Stefan Glombitza; and CFO, Erno Spillner in the call today. [Operator Instructions] Stefan and Enno will lead you through the presentation, and we'll be happy to answer questions following the presentation and a Q&A session. Let me now turn the floor over to Stefan Glombitza. Please go ahead, Stefan.

Thank you very much for the kind introduction. Dear ladies and gentlemen, a warm welcome on behalf of the complete Formycon Management Board to our earnings call. We appreciate your interest. Those ones who have read potentially our press release earlier this morning can already confirm that we are looking at encouraging numbers for the first 9 months in this year. In. Summary, we have a very strong operational performance [ management ] with multiple highlights, and we are also looking at robust financial key indicators. Enno Spinner, our CFO, and me will be happy to guide you through the details of the 9 months performance. As always, in those settings, we want to remind you that our presentation contains forward-looking statements, which are based on our current assumptions and might be subject to change, if unexpected risks or uncertainties materialize. There's still too many patients with severe diseases that are heavily underserved with biologics. And it's our mission at Formycon to change that and to increase the access of patients with severe diseases to life-changing, very efficacious treatments with biologics. And this through biosimilars -- through our biosimilars, our products from our pipeline. Our vision is implementing that and becoming a leading player in this very attractive space. And we're doing that by stringently executing on a clear strategic pathway. After a year, 2023 was a very strong performance ticking off all boxes, we can also look back at very operation -- very much operational highlights in 2024 with a strong performance underlining that Formycon is keeping its promises reliably. And this strong operational performance sets the foundation for a transition and preparing the ground for the next ignition stage, which translates the company's performance into sustainable profitability mid- to long term, as long -- as soon as the 2 additional programs and products will be commercialized in key markets. So with that, let me show you some of the highlights, and there were multiple of those. And then really that's the fun part for me, and I'm very proud of the teams that with their strong competence and passion and excellence, have contributed and delivered those strong deliverables. So what we can see here is usually sufficient for 2 or 3 years of performance or 2 or 3 of companies of our size. So we're looking at this year: 2 FDA approvals, 2 positive CHMP opinions. One is the approval, all of them for 202, Stelara biosimilar and 203, Eylea biosimilar. And just to make an important remark here. Each single of those procedures have been performed in a shorter time than the average benchmark in the biosimilar industry. On top of those procedures and approvals, we were able to include the first patient in our oncology program, Keytruda biosimilar, 206, both in Phase I and in Phase III, 1 month later. With that, we are among the frontrunners in this very important and attractive assets, and we are expecting the target reference sales of more than [ 30 billion ] at time of patent expiry. Portfolio is our lifeblood. That's why we are happy to announce that we also started, initiated a new program after a very intense selection process and I'm personally pretty confident that this product will be a very valuable addition to our portfolio with now 7 programs in [ pipeline ]. The only outstanding piece is signing the deals with additional commercial partners for our Eylea biosimilar. The frontrunner program is our FYB201, Lucentis biosimilar. And there, 2 years in the market, we can say now that we have launched across the globe in 20 countries already. And you see on that map the global distribution, and you also see the green parts, which indicates further potential for the countries where we're going to approve and launch the product. Outstanding [indiscernible] performance in key markets like U.S. with a market share and volume of the total market of more than 40% and [indiscernible] pay even more than 80%. Based on the strong commercial performance of our partner, Sandoz and Teva, respectively. So coming to 201 in more detail. You see that we are adding step-by-step additional countries, additional markets, additional revenue opportunities. And you have seen that there is an outstanding adoption and performance in U.S. and U.K. There are some markets where the adoption of this first biosimilar in the retina space was slower than in those 2 markets. And there, we want to create more momentum on planning to boost the adoption by introducing a [indiscernible] Dosage form in the course of next year. For Stelara biosimilar FYB202. We had announced already early in the year that we have achieved settlements together with our partner, Fresenius Kabi for the region. Worth to mention here also and to emphasize again that our settlement date in the U.S. moved up to no later than February 22, '25, which puts us really in the position of the very first launch date next -- starting next year. No launch without approval. That's why we are happy that we could celebrate end of September, nearly on the same day, both the approval by the FDA and also the approval by the European Commission for the European market. And as we speak, we are coming very close to the MHRA approval, which is the next month that we will achieve still this year. The series of approvals have been started by FYB203, aflibercept biosimilar, Eylea biosimilar, where we got the FDA approval June 28 already. We have struck the deal already with a commercial partner like in 201 for the MENA region with MS Pharma and further signatures to be expected in the next few months for the other regions. The EMA approval procedure has progressed pretty nicely as well, well advanced. Key landmark is always the positive CHMP opinion, which we received 2 weeks ago. And this starts the clock for the 67 days, which it takes them to get the formal EC approval, which will be then one of the first milestones for the year '25. If you look at the next [ following ] in our portfolio. I've mentioned already the big event and moment for us that we started a clinical program and it is not only that it puts us in an excellent position towards the biosimilar competitors. It also means something for us as Formycon having the first oncological patients in our studies for patients with malignant melanoma and lung cancer, respectively, being treated not only with Keytruda as the reference, but also with our FYB206 products, which makes us really proud. And of course, we are with the clinical team, very closely monitoring and watching that and pushing that the enrollment of those according to the expectation. It's also clear that long-term cost competitiveness is key in biosimilars. And that's why it's super important to have also highly producing clones and a very smart and intelligent and efficient manufacturing process. And this is the situation we have in 208 and 209 on the [indiscernible] in the immunology space, where we have identified such very good clone not only high producing. But also providing the right similarity, quality and stability, and we're working closely with our recruited manufacturing partners to develop and design a smart and efficient development manufacturing process, which then in the end, leads to technical proof of similarity. And also, further scale up plus supply for the clinical studies to come. And last but not least, new kit to the portfolio block, intense process of selection, looking at many opportunities that are out there, along a lot of set of criteria, and we have one FYB210, which is a very promising one. And we started already in the pipeline activities as we speak. With that, I think in a nutshell, I can summarize a very strong operational performance, really proud and grateful for the team, very impressive milestones. We kept our promises. That's the foundation of Formycon and that makes us confident that also future milestones will still be delivered reliably. And this is the foundation not only for approval, the milestone achievements, but also generating revenue and turning the company in sustainable profitability. And we're applying very high quality standards, not only in development in the product, but also into our financial processes, legally compliant and that will book of the focus for the preparation of the uplifting under the lead of our CFO, Enno Spillner, and that's perfect. I hand over to you, Enno.

Yes. Thank you, Stefan, and a warm welcome to everyone also from my side. Very pleasure having you on the call here today for our Q3 or 9 month numbers, respectively. And the great progress on the operational side, I can also confirm for the financial performance so we have good numbers. We are in range of our expectations, and therefore, I can already upfront confirm that we are fully on track in this regard. Let's have a brief look on the P&L as the starting slide for our financial performance. And I will guide you through more details on the sales numbers as well as cost of sales numbers on the following slides where we have added or introduced a few new slides for you. But briefly looking, we have a decrease in the revenue line against 2023. This was expected and this was also in the expected range. And there's 3 major effects, which are actually compensating each other, which are relevant in this case to be considered. And the same is then true for the analog and the cost of goods. With regards to our R&D expenditures, we have the focus now on our 2 maturing assets. Stefan briefly mentioned them, 208 and 209 are making good progress. And last year, we still had 3 products in our R&D expense being visible, however, the move where nevertheless, we had 207, 208, 209 and now it's the 2 focus assets. With regards to other expenses. We also do see an increase of expense like in the R&D line. This is mainly for 2 reasons. First of all, we have an overall increase in growing this part, for instance, for legal and compliance or for IT and especially security where we are investing all of this. Also recently, also topics coming up like ESG, where we will have published our first report at the beginning of '26, referencing to the year 2025. So we need to get ready for this as well. On the project side, obviously, Stefan just mentioned it. We had some strategic activity, especially the uplisting at the Prime Standard -- out to the Prime Standard, including fully audited prospectus prepared to us from our lawyers. With regards to the EBITDA, we have a decrease. And like for the revenues, this was expected, now being at minus EUR 17.7 million. The major reasons here is obviously a reduction of revenues, an increase in the R&D and the SG&A expense. And I'll come back to again to the sales effect of that in a minute. The adjusted EBITDA at first sight looks very similar to the previous reporting period. That said, if you look then at the delta to overcome from the EBITDA position, you see that we have a significantly higher impact from the adjusted EBITDA this year up to Q3 2024 compared to the previous year, namely going from minus 18 roughly to plus 3 versus last year being at 5.3 versus 2.5. So here is really a significant progress, and that comes clearly from the performance of 201, which I will show you later once again. And also on the CapEx. On capitalized expenditure, you see an increase. This is mainly derived from our FYB206 activities, which I will showcase to you later on as well. So now let's take a look at the breakdown of the revenues and also compare it against the same period in the previous year. On the left-hand side, the circa referencing for 2024, first 9 months and on the right side, the same for '23. And as I said, we have a decrease but it's worth looking at the details and starting at the blue part of it, you see that the compensation work that we conduct on 201 and 203, which is then reimbursed by our partners like ATHOS or Klinge, is being reduced significantly. Therefore, the recharges or the respective revenues, which are also being reduced. There's some work remaining like preparation work for the PFS and some others. But overall, as these products have been or are concluding from the development perspective, there's no major investments there anymore. Therefore, also no major reimbursement on the revenue side. So this part is going to decrease also in the future going forward. The second part is the yellow one that I would like to draw your attention to namely the milestone payments from 202. And here, we had EUR 29 million in 2023. However, in this EUR 29 million, there was the EUR 10 million upfront included, which we, of course, did not see for this year. And if you subtract this EUR 10 million, you are probably in the same ballpark like we now have for the year 2024. So we have here a kind of continuous performance in this regard going forward and therefore, covering the revenue from our milestones being [indiscernible]. The third part is the royalties from FYB201 where we vested at EUR 2.3 million in 2023 at the same period, now going up to EUR 6 million. And this is clearly increasing these kind of revenues. But obviously also, bear in mind that 2023 was still a ramp-up year. So we are already going forward. And it is obvious in total that this is the part that is supposed to increase in the next years to come. Stefan just mentioned, having the basis now with 202 and 203 being approved or almost approved for Europe for 203. But in principle, now adding these assets in the future, this is the building block that we want to increase significantly and taking over the reduction of the revenues, especially from the cost compensation part. And the same then applies for the cost of sales perspective, where we have stable cost on FYB201 and this is again, PFS development and maintenance. We have a reduction in costs for 203, in principle, the same underlying pattern of PFS development and maintenance, but the difference against the higher cost in 2023 is that the cost for filing and registration with the FDA, EMA and so on, was mainly spent already last year. And this is obviously not required anymore for this year. And therefore, we have a significant reduction of cost of sales in this regard. And last but not least, we have a fairly stable 202 cost of sales in terms of developing the product bringing it over the fence for the European and for the U.S. approval. Next slide. This slide looks very complex, and it probably is a little bit complex, but we keep getting a lot of questions from the audience and from you on how does the 201 financial performance work. And let's rest on this slide maybe for 2 or 3 minutes, and I will try to guide you through the single steps so that you have more transparency for a better understanding. And let's start on the very bottom on the left side, where you see our partners. Sandoz, Teva and MS Pharma who, on the one hand side, took a license from us or from Bioeq, respectively. And in return, reimbursing us for the production price of the respective materials and obviously, sharing their profits according to the profit share agreements that we have in place. And if we take that as a basis and then moving to the right column of the numbers 1 to 5, let's start on the top with the development and compensation. Again, this is the part where Formycon is deducting development work and being reimbursed for this work by Bioeq. In this case, which then triggers respective revenues and cash inflow. This is basically the historic part of this product development, which is in place already since a long time and still some development work being reimbursed. The second part is about the current performance of this product, mainly performance-based royalties, again, translating into revenues and also cash into Formycon. And this is simply the [indiscernible] forward of the performance of Sandoz, Teva and MS Pharma where we get our respective share from the out-licensing. As a reminder, as I said, EUR 6 million roughly this year and EUR 2.3 million at the same last year. So a nice increase going forward. The third part is the repayment of the loan. This is a loan provided by Formycon and [ Klinge Biopharma ], the second joint venture partner of Bioeq to Bioeq. And over time, Bioeq will repay this loan. And here, we have, in this year, already received EUR 22.3 million of repayment of this loan, the advantage of the Formycon cash flow. In total, so far, since the project is now bringing returns. We have seen EUR 20 billion. And we are also expecting further repayments already this year, probably not in the same size like EUR 22 million or something. But still, we try to carry over cash positions from Bioeq into Formycon. This is a cash-only effect, does not influence our peer. The number four important block is then the at equity result. Again, below our EBITDA performance. And here we are entitled to 50% of the net profit performance or the net result performance of Bioeq. And this is then carried over to us through this equity result, which we then see below our EBITDA line. Last but not least, we do have the earnouts. So this is our obligation as Formycon towards our partner, ATHOS, where we have to share the success with them and obviously, this so far this year is of EUR 10.5 million, which is a cash-only impact because this is going against our balance sheet, our earn-out obligations, which are being reduced accordingly. And please remember that not necessarily the earnouts always directly correlate to the equity or other performance. There's a little bit of a lag timing though this does not always go absolutely in sync. So bottom line, this means we have achieved EUR 6.9 million plus EUR 6 million, making it to EUR 12.9 million in revenues and the EUR 20.6 million at equity result, which then overall shows the performance here of EUR 26.7 million and I think this clearly shows and hopefully makes it traceable for you that we have a clear impact -- positive impact by the 201 performance year-to-date. And with that, we move to the next slide and referencing to some other important KPIs like in our balance sheet total, which increased by roughly EUR 61 million. Here we have 2 compensating effects on the one hand side. At the beginning of the year, we saw the capital increase of roughly EUR 83 million from Gedeon Richter joining us as a major shareholder. On the other side, we have a roughly much EUR 20 million net result which is partially compensating that. And the same is then true for the equity where we see the same effects going forward. And then with regards to liabilities, there's a little bit of a breakdown into different positions. So shareholder loan repayment at the end of Q1, you may recall that of EUR 20 million earnout, EUR 10.5 million, what I just described to you. On the other side, we have a change in our fair value model, so to say, in our interest calculations of our earn-out obligations, which goes into the other direction with about EUR 20 million. And we have, in total, around EUR 8 million referring to deferred tax, leading working capital and other smaller positions. So that in total, we have an effect of EUR 2.1 million. Speaking of liabilities, maybe just as a side note to mention our shareholder loan by 2 of our major shareholders has been recently prolonged and now runs until end of May 2026, just for your background information, and certainly helpful for our ongoing concerns and considerations. Equity ratio around 60%, quite strong, quite solid at a high level. And last but not least, cash and cash equivalents stood at EUR 33.8 million, which is a very solid position and also increased against the beginning of the year. And please bear in mind the milestones that are due to be received by Fresenius Kabi for the approval in the U.S. and in Europe are not yet in this number considered. Brief comments on cash flow and working capital. I mean in principle, most numbers I directly or indirectly gave some comments on. But also here on the net cash flow activities, minus EUR 41 million. Again, the milestones are still due from Fresenius Kabi. So this is not yet considered here. On the next position, you can see our really significant commitment into FYB206 of almost EUR 25 million, which is under CapEx. And on the other side, receiving the repaid Bioeq loan or partially repaid of EUR 22 million going through. On the right-hand side, with regard to the working capital. Again, the major impact you see on the current receivables Fresenius Kabi milestones and also the revenue accruals and the contract liabilities and contract assets are directly correlating to this going forward. Last but not least, the current liabilities and accruals are mainly project-related accruals, which are above EUR 11 million within the EUR 15.9 million. So much for the core financials at this point in time. Let's have a brief check-in on the outlook for 2024 for the remaining quarter. And high level, first of all, we can confirm the guidance that we adjust in context in H1. So that's stable. We will see a slightly or most slightly uptick revenue recognition in the last quarter. So for most of you wonder how we can come from EUR 41 million to maybe EUR 60 million in that range. We see or we probably will see some smaller one-off effects, which will contribute in addition to the optional performance. On the EBITDA basis, as a consequence of that, we will probably see a black zero for Q4, and that clearly helps us to achieve our range as we have continued to indicate a minus EUR 15 million to minus EUR 25 million. The adjusted EBITDA will also see probably a black zero or a kind of a stable or neutral result so that we also can confirm our guidance here. And referring to the working capital you can once again see that the major commitment is the investment into our 206 clinical performance, which will take quite a bit of our cash position, investing EUR 19 million into CapEx. And with that, again, I can confirm our balance from what we see or know today. Briefly, a slide Stefan already mentioned it. We achieved or conducted our uplisting and had the first day of public trading on the Prime Standard on November 12. We are very proud of that. But more important is that we want to achieve, obviously, a better platform here and a better visibility of Formycon for institutional investors, for international investors and for investors with a large science interest. Clearly, we want to have more or improved transparency also in the context of our reporting and higher liquidity, which we want to increase in our day-to-day share trading. And for those who are reading all the details, you may recognize on the right-hand side, for our top shareholder, used to be framed as ATHOS, now it says Sandoz but this is not a change. This is just a formal requirement under the new reporting regulation. It is the same a shareholder on the same group being with us. So no changes here. We remain with almost 40% free float. So a good platform, a good basis to increase liquidity, which we will continue to work on. And with that said, on our last slide for today, let me just summarize what Stefan and I just described to you. We think we have all ingredients and all criteria in place to continue to successfully develop Formycon as a general, but especially our pipeline, bringing it forward. And together with our partners on the commercial side, transforming Formycon from a development company going now into the stage of becoming a more and more commercial company. We are in a field of a very dynamic, fast-growing biosimilar markets where we clearly see additional momentum or further momentum continuing. And not only the pipeline is strong that we have developed over the past year, but also the platform and the track record that we have established by now clearly can show that we know how to select and develop biosimilars. Last but not least, again, as I said before, we are on this transformation stage at this point in time, but we are on a really good track and therefore, are very optimistic that we can achieve our targets in 2024 and also in the midterm. And hopefully, we can do this together with you. And therefore, I'm at the end of our presentation, we are open to your questions. And I would like to give back to the operator so that you can post your questions. Thank you very much.

[Operator Instructions] And the first question goes to Christian Ehmann from Warburg Research.

Enno, I just have one at the moment, please. Could you remind us about the commercialization pathway going forward for 206?

Yes, thank you, Christian, for that question. I mean 206, you mean the licensing activities we're targeting there?

Yes.

Yes. I mean I've briefly introduced and then happy to hand over to the lady that is in the lead for that. So we are in the competitive process. We see a high interest in this attractive asset. And we are planning to intensify that out-licensing discussions and are planning to do something that are more tangible next year. But Nicolas, please chime in.

Yes. Good afternoon. So it's -- of course, a very important topic for us since, I mean you know our business model is not marketing [indiscernible] therefore, it's really absolute essence to choose the right partners and find the right commercial models also in our contracts. And for FYB206 as Stefan mentioned, it's my top priority at this time now. We are testing with different companies, all the different concepts with regard to go or more regional, local partnering. And there is very good interest from different partners worldwide. And I think that shows that meanwhile, there is really a lot of trust in Formycon that can really bring these products over the finish line in time and head-to-head with very big organizations, which we are competing with. So that -- it was not always like that, and this is a clear, I think, proof of our concept and our operational promises, which we keep since years. So I'm pretty confident that we find a good partner for our most important effort.

I have one follow-up. I appreciate the update on 210. Could you give us something to model? [indiscernible] model, what kind of development and marketing timelines you envision? What year are we talking about?

Yes, I understand that question. Now I would ask the same question, your position. Please understand that we do not share details now. We are not disclosing now. You can be sure that this is an asset that is in the broader space of immunology. It's growing quite fast currently and in the next years, predicted to grow in that stage. And yes, timing-wise we will -- of course, it's after Keytruda so it's in the 30s. That's the only thing we can say so far. But of course, if we are more advanced than we can leave under the rate of position. We will for sure get more details for your modeling.

And next question is from Simon Scholes from First Berlin.

Congratulations on my side for the year. A very strong pipeline development performance. I was just wondering if you could give us an update on Regeneron's legal dispute with Formycon and the other Eylea biosimilar developers.

Yes, Simon, happy to do so. In the restrictions I have legally, what I can talk to that, so first of all, I mean, we are in a very good by having -- I think it was #3 to get the approval from the FDA that puts you into a lead position. We saw also that kind of -- there are oral proceedings in the go. We are in the -- let's say, very strong position, together with another big player in the First Defense Group, thereafter Amgen. And I think that with the Amgen launch at risk that we also see more momentum. That's, of course, bringing more push into proceedings, into settlement discussions, into litigations. And you can be confident that we are very close to that, very actively driving that together with our lawyers and specialists that we feel well-positioned. Nicola, you want to add?

Yes. I mean perhaps you can differentiate a bit between the U.S. and Europe. What Stefan mentioned mainly, at the moment, relevant for U.S. So you know that Amgen launched at risk. They are the only ones who launched at risk so far. Other companies like us are currently still under an injunction. There will be a hearing on that injunction -- on the appeal of that injunction next week actually. There will not be -- most likely decision, but the decision we expect then within a reasonable time thereafter. We see we have very strong arguments. We are, as Stefan mentioned, in the [ trial ] Defense Group with 2 big players in public that [indiscernible]. So in that sense, we are fighting head-to-head or together with them later. We will, of course, see fierce competition, but deciding against the originator is a normal thing that you collaborate and we feel we have very good arguments. We also feel that the launch by Amgen put a lot of pressure on Regeneron, and we hope that this will overall speed up the thinking also on their side, whether there can be certain also negotiations, should be possible. The goal is, of course, launching the product at some point before 2027, where the main patent expires and much more we cannot say at this stage. And in Europe, there was this week, a decision by the European Patent Office, nullifying one important patent Regeneron. That's a good step. Still, there is other litigation, mostly local litigation and different countries pending. And also here, we are very active. And the only thing we can say for sure is that SPC on the compound expires in November 2025. So next year but we are not yet exactly sure when we can really launch due to this ongoing other litigation, but also we're relatively confident that it will not take too long.

Yes. The invalidation was a good signal in the right direction.

Yes.

Yes.

And the next question goes to Damien Choplain from ODDO BHF.

Congrats on the good publication. Two questions, if I may. The first one is on the 201. So the market share in the U.S. seems to be slightly decreasing. You mentioned the market share of 45% in Q2 and 40% in Q3, if I'm right? So can you please comment on that trend? And the second question is on 203. Should we still expect the signing of a potential partnership by the end of the year? Or is it too ambitious?

So on the FYB201, I think there is a bit of fluctuation in the market share, which is very normal. There are some seasonal also impact and some -- it depends always on the order volumes from the main customers and so on. So I don't think that you can read from that, that we are significantly losing market share going forward. So it's really more timing effect at this stage. So that's why. I also saw the -- I think we showed last time, 45%. And I cannot tell you by the day where we are. It's really -- yes, subject to some fluctuation. And the other question was with regards to partnering for FYB203. We are pretty close. So within the next few months, we will be able to announce partners in the U.S. as well as in Europe. The exact date, I cannot tell you.

And the next question goes to Nicolas Pauillac from Kepler Cheuvreux.

Congrats on the result. And thanks also for this new slide to break down the revenue recognition that's going to be very helpful. So maybe 2 questions from me. The first one will be coming back to 210. Do you think that you could just give us a range in terms of what kind of revenue you are targeting? Is it like a mega blockbuster like huge with 206? Or we are in the smaller range, like EUR 5 billion to EUR 10 billion. So that would be the first question. And then second question about the overall pipeline strategy. That's no, let's say, the fourth compound that you have announced in this second wave of biosimilar. What size of biosimilar wave do we need to see to look forward in other terms? Are we to expect new compounds to be added to that? Or do you feel like you have enough compound now to move forward with these 4?

Nicolas, thank you. Maybe I'll take that one, too. So as I said before, I mean, to attend, we are not sharing that much detail. I'm not able to. We could, of course. I mean I would position that not in the mega blockbuster area, but in the mid blockbuster area or mid [indiscernible] area, if we have to put it that way, if that term exists at all. So we're trying to really do a good mix of block and niche busters and we are continuing to do that. So that will be not in the upper range of sales numbers but in space where we don't expect that much competition, and where our development excellent pays off. And as mentioned in some of our earlier settings, there will be more than 50% of the biologics totally untapped for biosimilars. There are a lot of opportunities up and picking doing the right pick with a decent market size, but still low competition and that's pretty attractive. And that's what we continue doing. And I mean the main limitation of adding new products, which are our lifeblood is the funding. And so as soon as the funding opportunities with the incoming revenue flows allow that, we will add more programs. Of course, we cannot add endlessly with the same organization, but the organization is scalable, and we have the expertise in-house and we can expand that to more than 10 within the next 2 years. So that's the target, of course, as long as the funding and revenue situation.

And the next question goes to Yi Chen from HC Wainwright.

Could you please confirm that Fresenius Kabi... [Audio Gap]

Hello? I think we lost you. [Technical Difficulty]

Yes, I think we lost Yi but he's now back.

Hello? Can you hear me?

Yes, yes. But we need you to repeat your question. We lost you.

Yes. So I was saying that could you please confirm that Fresenius Kabi will launch 202 in the U.S. in February of 2025?

What we can say that is we are well prepared together with our partner, Fresenius Kabi, and the settlement allows us to launch market entry no later than 22nd of Feb next year. That's without any doubt.

And we can say there is no reason to believe that this will not happen. Of course, we can fully control that, yes, but we have no [indiscernible] that, that will not happen.

And with respect to 201, it's currently available, your product, to 20 countries worldwide. Can you comment on how many more countries 201 can enter in 2025?

Question to Nicola.

Yes, we will -- next year, we will probably not add a lot of more markets in '26. We will then add certain LATAM market. But next year, there might be 1 or 2 in the MENA region, smaller markets. Then there's another, I think, a number of launches planned for 2026 in LATAM.

If I may add as part of my presentation as well. It's also boosting the adoption in some markets that are slowly adopting and introducing biosimilars. And that shall be supported by the introduction of [indiscernible] as additional [indiscernible].

Got it. Last question, just in terms of strategy for partnership, do you need to have a different partner for each approved biosimilar drugs?

You mean in terms of commercial partnerships?

Yes.

Yes. No. I mean we are completely free to choose that. And I mean, thanks to Nicola's endless network, we have a lot of options there. We pick the commercial partners that are fitting best to our knowledge and our experience and to the bid defenses in a certain therapeutic area but also in certain strength in a certain region. So that's how we pick[indiscernible] the partners. And if there is the same therapeutic area and it works well, then, of course, we choose the same partner, if that partner is available. If not, we are free to choose others.

And the next question goes to Natalia Webster of RBC Capital Markets.

Hi there. Can you hear me okay?

Yes.

Great. I have 2, please. My first is on FYB202 and the Fresenius partnership. I wanted find out if you think Fresenius will want to secure an own label contract with the PBM in the U.S. and if this is critical for gaining share there? My second question is on 206. Do you have any thoughts on Merck's subcutaneous data that came out recently? And is this a threat to the market opportunity there?

So maybe I'll start with the 202 and then right away, hand over to Nicola because we have been both with the Fresenius U.S. team 2 weeks ago. Of course, we cannot share details. There are, as we speak, a lot of contract negotiations with PBMs, small big ones, payers across the whole landscape. What we can say and what is really -- and there's nothing hammered in stone yet. So even if we would not be able to share, but what we can see is the encouraging news also from the Q3 call of Fresenius Kabi. If you look at the tie-in rollout and launch tocilizumab, you see that there have been 35 contracts already signed year-to-date, and this is a launch that is running well with all the partnership on the payer side that has been struck and we are pretty confident that this is the right direction and will pave the way for ustekinumab. Nicola, any?

Yes, I think as we are not marketing our products or selling our products ourselves, of course, for us, it's very important that we stay very close with our partners, and that's also why we visited, for example, Fresenius. Of course, this is for us, key next year and the years to follow. And we can just say we have a pretty -- yes, we had a very good meeting where we met people from the sales team, from the marketing and market access team. And we believe that they are well set up with their structure and also with their experience meanwhile, over we launched products. And then of course, there is still a lot of discussion about how quickly the market will open up. But we believe that Fresenius has gained enough experience with the current portfolio to know how market access, mainly contracting with payers and GPOs is done, and have also a strong network there. So that was important for us to check that talking to the people directly, and we believe we are well set. Of course, we cannot comment on any individual contracting like private label, what you mentioned. And the second question was on 206.

206. Subcutaneous maybe Andreas [indiscernible] this announcement of Merck with respect to the successes in key development of the subcutaneous version. It's difficult to comment on competitors. But I think your question is going directionally, what does it mean for us in the future with respect to competition. It's difficult to predict. However, if you look back to other logics where the originator company also developed sub-conversions, I would say that it's not a real threat to the biosimilars because the market shifted back to the IV versions when the biosimilar companies launched their products. Because obviously, for the payers, the price is more important than the convenience for subcu products.

And the next question goes to Alexander Galitsa from HAIB.

A few questions. The first one is on the equity line. I'm just wondering if you could help explain or help understand the dynamics there. Quarter-over-quarter, specifically, you go from, I think, EUR 10 million in Q2, down to EUR 6 million Q3. Just wondering whether that's down to lower amount of revenues you recognized for the quarter? Or is it just due to higher cost at the joint venture? That would be the first one.

Yes. And I think there's a little bit of volatility between the quarters because as you could hear also on this a little bit complex slide, there's also still cost within Bioeq doing certain works and processes in them in some quarters, lifts the numbers a little bit. And then others, it lowers the performance accordingly. So I probably would not tend to read out too much out of the individual quarter, but more looking on a mid- to long-term performance that we can fully deliver here. Yes, but that's the cost that is still inherent in the Bioeq, speaking of prefilled syringe and other activities, for instance.

Understood. And then the other question is -- goes direction of your guidance. Just wondering what will be your approach towards the definition of the guidance, I guess, for 2025, given that I guess commercialization of the products is not something that you have much control over beyond, I guess, choosing the right partner. And also whether you expect to have any more control, I guess or insight, into the forecast of Stelara with Fresenius as opposed to Lucentis Biosimilar where you have Sandoz as a partner?

Yes. And certainly, this year's budget exercise for 2025 is probably not the easiest ones because we have quite a few of these big puzzle pieces, which are not totally on our own control. In principle, we will stay, at least, according to current planning with the major KPIs that we have been guiding on also in the past months and quarters. That's the current idea. And of course, we need to be very close in these discussions with our industry partners like Teva, Sandoz and Fresenius, for instance. However, even for them, it's today, a challenge to say what will be the market price exactly. What will be the sold units and the respective market share. So on that basis, we probably will have various assumptions and then try to derive the budget out of that and also guidance out of that. But certainly, that needs a few then also the discussions also with you then and the public on introducing what are the potential ranges up and down. And also what are the risk factors and the opportunities in such a guidance.

[Operator Instructions] Okay, there seem to be no further questions. So let me hand back over to your host for some closing remarks.

Yes. Thank you. Thanks to you as an operator, perfectly managing the -- and coordinating that. To our IR team, for preparing that together with you and of course, also my Board colleagues for chiming in and the questions. And last but not least at all, to you, ladies and gentlemen, for listening to our results, asking very good questions. I hope we could answer all those and indicate to you that we're really looking back at 9 very strong months, which are the -- setting the ground for the initial stage and make more good news to come this year still and also next year. What I want to also guide you to is also another virtual roundtable we are planning together with MWB Research, which is a roundtable on 12th of December in German. So whoever is interested, German-speaking, happy to offer you as well this opportunity for asking more questions in more details, happy to answer those. And with that, I wish you -- for those ones who will not dial in, already good weeks ahead of us. There's still some time for Christmas. I will not talk about Christmas, but have good weeks and months ahead of you. Thank you.