Formycon AG (FYB) Earnings Call Transcript & Summary

Hello, and welcome to the Formycon AG conference call regarding the latest developments on our biosimilar programs. [Operator Instructions] Let me now turn the floor over to Dr. Stefan Glombitza, CEO of Formycon.

Yes. Thank you very much, and good afternoon and good morning, whatever geography you are dialing in from. A warm welcome, and thank you for joining us today for this conference call. As always, we appreciate your time and your interest in Formycon. Earlier today, we issued an adhoc statement followed by a press release with a bundle of important updates regarding our 3 programs FYB201, 202 and 206 and we want to use this opportunity to provide you with some additional context, discuss the key takeaways and address any questions you may have. Joining me on this -- today's call are Enno Spillner, our CFO; Dr. Andreas Seidl, our CSO; and last but not least, Nicola Mikulcik, our CBO. So we will explain the key takeaways in a short presentation first, and afterwards, and we will be happy to answer additional aspects that are on top of your mind in the Q&A section. Before we begin, I would like to remind you, as always, that today's presentation and discussion might contain forward-looking statements, which are based on our current expectations and are subject to risks and uncertainties that might lead to material differences to the estimates here -- given here. So again, we had a bundle of news on 3 of our programs. U.S. market dynamics in CIMERLI U.S. FYB201, Otulfi U.S. Stelara biosimilar. Very good news on the Phase III waiver in 206 and then finally, we summarize the impact on our financials and give an -- I want to give you an outlook. Let's start with FYB201, our Lucentis biosimilar, which is marketed as brand CIMERLI by Sandoz in U.S. Here, we indicated in our communications earlier today that the commercial strategy of our partner, Sandoz in U.S., will need tactical adjustments for the upcoming phase and that one very likely strategic scenario will be the intermediate pausing of commercialization, combined with a reentry at a new level. And these U.S. specific dynamics may sound, of course, very unfamiliar for most of you, and I will be happy to give you a bit more flavor to it. In the life cycle, in general, of a marketed product, especially in this U.S. buy and build channel, you have to continuously review the price volume position in the market versus your competitors and each phase needs a customized commercialization approach. Bioeq and their joint venture partners, which is us, Formycon and Polpharma, are working closely with the commercialization partner Sandoz to analyze the optimal strategic positioning of CIMERLI in the U.S. market for the upcoming years. As the first ophthalmic biosimilar, CIMERLI has achieved a significant market position. about 50%, as you know, of the total ranibizumab volume end of last year since its launch, end of '22. So we can say it has been successfully established in the buy-and-bill segment with a market-leading position. The buy and bill segment, just for the explanation is the channel which is affecting products that are purchased and administered by physicians. The pricing and reimbursement mechanisms of the U.S. market are very complex and dynamic, particularly the average sales price development and the rebate structures. So they require continuous adjustments of the business strategy throughout the product life cycle. This cyclic management of product is already well established. That's not unusual. There are in-market examples, plenty of like for instance, the pegfilgrastim, which has run through different phases and strategies of the market players in the approximately 7 years since the first biosimilar has been introduced to this molecule. If you look back to the first phase is following the strong initial market penetration driven by Coherus and the successful continuation by Sandoz, we have now reached a point where a strategic realignment is necessary to ensure the medium- to long-term competitiveness and valuation of CIMERLI. In this context, our license partner, Bioeq AG is engaged in advanced discussions with Sandoz on various measures to enable all with the target to enable sustainable value creation. A temporary pause in commercialization is a likely option with the goal of preserving an attractive level after reentry with a different strategy. And the introduction, for instance, of a prefilled syringe as a new presentation is one further element of all the considerations. I'm sure you will understand that we cannot provide more details at this point in time due to very competitive nature of such strategic measures. Sandoz is a very reputed commercialization partner, markets, other programs, other products in the buy and build segment. And in our discussions, we are fully counting on their expertise to define the right strategy on the way forward. In general, we remain very confident that the long-term significance of this biosimilar in the retina ophthalmology space in the U.S. as well as, of course, globally and we will continue to diligently assess all options to protect and enhance the product value across all geographies. And in this context, it's worth to mention that the potential intermediate pausing in the U.S. will not have any impact on markets outside the United States, which are meanwhile 19 further ones. I hope this could provide you with some more context around the planned strategic repositioning. We will be happy, of course, to take more questions on FYB201 in the Q&A. Now let's move from the buy and bill segment to the pharma benefit channel. Another important channel in the U.S. market. And this one is primarily relevant for our FYB202 Otulfi biosimilar and our commercialization partner, Fresenius Kabi in the U.S. We have announced this morning that based on the latest insights from our commercialization partners, we are reviewing the valuation model for FYB202, which is expected as we announced to lead to a noncash relevant extraordinary adjustment for the fiscal year 2024. So let me take a moment to explain what is happening in the day-to-day market dynamics. As we approach the U.S. market launch of FYB202 Otulfi, which is very close, we have closely analyzed the latest dynamics together with our commercialization partners. Recent insights indicate that the price discounts for Stelara biosimilars in the U.S. in general, and particularly the one that is relevant in the pharmacy benefit channel are likely to be more substantial than initially expected in our last assessment. While the early market projections assume the gradual price adjustment, recent developments suggest a more competitive pricing environment from the outset. The latest trends in the adalimumab segment have demonstrated this was the first biosimilar in the PBM market. They have demonstrated that some biosimilars have entered the market with discounts of up to 85%, also driven by the fact that the originator product HUMIRA kept its reimbursement listing with the large payers in the first year. There was the initial expectation for many experts that the learnings from the adalimumab and on top, the measures of the Biden administration against the existing pharma benefit structures would create sufficient tailwind for the ustekinumab biosimilar landscape evolve differently and to gain traction and market share at less aggressive discount rates as we see partly in the buy-and-bill channel. Current discussions with the U.S. payers indicate that significant discount will still likely to be required, already at launch to gain momentum in the payer contracts. As a result, we have adjusted our revenue expectations for FYB202 versus the version previously. Given these updated assumptions, we are reviewing, of course, also the valuation model for FYB202 and our indication is that this will lead to a noncash extraordinary adjustment for the fiscal year 2024 in the communicated range. And Enno Spillner will come more to details around that later on. That said, the overall market outlook for FYB202 and 4 biosimilars in the U.S. remains highly attractive. And the value contribution from FYB202 is still very significant even after the adjustment. Biosimilars continue to play a crucial role in improving health care affordability, that's unchanged and major pharmaceutical companies have reaffirmed their commitment to this segment as a key growth driver. Our partnership with Fresenius Kabi remains strong. and the launch preparation for U.S. and Europe are in full swing. And we expect that Otulfi can benefit from Fresenius market presence and offerings also, especially in the U.S. from adalimumab and tocilizumab biosimilars, which are in the same therapeutic area. We also remain confident that FYB202 will be a sustainable growth driver over the next years for our company. With that, I want to close the commercial part for now in the U.S. market dynamics and come to the more scientific part. And who could better explain our recent great achievements from our pioneer work in tailored clinical study design than our CSO, Dr. Andreas Seidl.

Thank you, Stefan, for the introduction. We have announced earlier today that we decided to discontinue the patient enrollment for 1 of the 2 parallel running clinical studies for our FYB206. The in-depth scientific exchange with FDA have led us to the conclusion that the Phase III study in the indication lung cancer, so-called Lotus study, is not any more required to demonstrate similarity between FYB206 and the reference product Keytruda. Patients who are already treated in the context of the study will be switched to the local Keytruda and treatment will be continued according to local treatment guidelines and the label. Usually, when the study is stopped prematurely, there might be negative reasons. However, for FYB206, this is definitely not the case. There are no quality or safety problems with our biosimilar pembrolizumab. The parallel ongoing Dahlia's trial is on track and will be continued as planned and also as recommended by the independent data safety monitoring board. The waiver of the Phase III trial is rather reflecting a paradigm shift of FDA into the breakthrough for biosimilar development. The improved clinical program for FYB206 positions Formycon, as a pioneer for cost-efficient streamlined clinical development of biosimilars. This more cost-effective approach will further enhance patients' access to wider biological drugs in the medium term. Let me now give you some more background information on some of the questions you will probably have. I assume you may be wondering how sure we can be that the FDA will eventually approve FYB206 without Phase III data. We discussed our clinical program for FYB206 in several scientific advice meetings with FDA. The feedback on the waiver of the comparative safety and efficacy trial in lung cancer is documented in the official meeting minutes and therefore, can be used as guidance for FYB206 clinical development. As always, the approval of FYB206 will eventually depend on the review of the totality of generated data that will be submitted to FDA with the BLA after finalization of the ongoing trial in melanoma. Furthermore, our approach should not have an impact on the extrapolation of indications. On the background that the mode of action of pembrolizumab is the same in all indications FYB206 should be approvable for all indications of the reference model Keytruda provided a high similarity on the analytical and functional levels will be shown and PK equivalent will be demonstrated in the ongoing clinical study in melanoma. I would like to say a few words on this ongoing PK trial in melanoma. The study is progressing well and patient enrollment is on track. Last patient in is expected still this year. We will then evaluate the data and use the time between study day and patent expiration in the U.S.A. to generate comprehensive data sets on analytical similarity and the manufacturing process to be embedded in the dossier for the BLA submission response then afterwards to information request of the FDA finalized the registration procedure before patent expiry and prepare for market launch together with the future commercialization partners. As we also spoke about price declines in today's announcement, you may wonder if it is the right strategy to go all in on the U.S. market for this biosimilar given the expected discount on our Stelara biosimilar FYB202. First of all, discounts applied to biosimilars can vary a lot, depending on the indication, competitive situation, distribution channel, et cetera. By the way, for pembrolizumab, it is not a PBM channel. Second, we still target multiple other markets outside U.S. The biosimilar guidelines of many regulatory agencies around the world, allow in principle to develop biosimilars with streamlined clinical development approaches. However, this was applied in only very few cases so far. However, we are optimistic that other regulatory agencies will now follow the FDA in the context of global harmonization initiatives. For example, the EMA is working already on a new strategy, which will be published in a reflection paper in Q2 this year. You may wonder now how will the waiver affects the competitive landscape for FYB206. We cannot comment on what our competitors will do regarding their Phase III trials. The general applicability of a streamlined clinical development approach should be equal for every applicant. But the waiver decision very much depends on [ AG ] we achieved and demonstrated analytical similarity, the proposed PK program and the provider justification for a waiver of Phase III, which are very specific for each company and for each project. The waiver of the Phase III study will most probably not need to more competitors in pembrolizumab biosimilars for the first launch phase, the time remaining until loss of exclusivity of Keytruda and first biosimilar market launches would be way too short for a company to start development now and obtain market approval in time. Therefore, we believe that with our FYB206 program, Formycon are well positioned among the leading developers of Keytruda biosimilars and play a pioneering role with the streamline study program. And again, the medium- and long-term perspective, the streamlined clinical development approach will further enhance patient access to these vital biological drugs. With this, I would hand over to Enno Spillner in order to provide the context from a financial perspective.

Yes. Thank you, Andreas, and also welcome from my side to everyone on the call here today. The scenarios previously described just by Stefan and Andreas for FYB201 and FYB202 will have an impact on our financial models for both products and hence, trigger respective impairments for our year-end 2024 considerations. However, and that's important, we are assuming that our major guided KPIs, namely revenues, EBITDA, adjusted EBITDA and working capital will not be affected by these impairments. But we will see an extraordinary noncash impairment requirement in the high double-digit to low triple-digit million range for FYB202 and same scenario, but in a much lower ballpark for FYB201, showcasing a net negative effect for FYB201 of very low double-digit adjustments. With that, the company's net results will be negatively impacted by these 2 partial write-downs accordingly. Still, we remain with a very significant value for FYB202 in particular in our balance sheet, which also indicates that we will remain with significant commercial expectations for FYB202, roughly still reflecting 3/4 of our previously planned models. Please also bear in mind that the indicated adjustments are noncash events, as I already said, and the respective impairment model still require audit reviews with our auditors. The changes for FYB206 planning will also not impact the 2024 financial statements. Here, we will experience a very significant high double-digit million cash savings over the next couple of years. This is, as Andreas already mentioned, very positive news and will partially compensate for the financial effects that we will experience from FYB201 and FYB202, plus it will provide additional headroom for the continued development of our earlier pipeline candidate. For our medium- and long-term full business plan, this in total indicates that revenues would partially decrease or realized later, especially in the years '25 and '26, however, launching our next product and continued development of our sustainable pipeline assumed midterm expectations continue to show a sustainable and growing revenue line as well as a positive EBITDA. Consequently, it remains our unchanged goal to become profitable in the medium term and to achieve this operating -- to achieve operating positive cash flow as well. Overall, there is no doubt that biosimilars will play a key role for further sustainable health care budgets worldwide and almost all marketed biosimilars we have seen in the past, follow a highly successful commercial history. Even if there is a change in pricing, we remain confident that biosimilar business is a highly attractive field of activity, especially for Formycon as a dedicated and focused player for biosimilar development. And with that said, I hand back to Stefan for the wrap-up.

Yes. Thank you, Enno, for giving some more flavor on the financial side and also perspective. I would like to echo on that as well as closing summary and takeaways looking forward. So the commercialization, and that's what we experience every day of biosimilar is very fragmented and market specific, very much depending on the local policy environment and the structural framework work given in the respective country. And that's why it's so important to have experienced partner, commercial partner for each market and each product, which we have. While we see very predictable structures in support of biosimilars with a huge penetration rates in the years in most European countries, the U.S. market environment tells us every day that biosimilars are still very dynamically evolving. And the buy-and-build segment sees already -- there it's more settled like the European patterns. It seize already strong market adoption since years. While the market -- pharma benefit channel, sorry, is lagging behind still and needs further pressure -- political pressure to unbreak these limiting barriers. And there is quite something ongoing since years. And I think the Trump administration already announced that they will go more deeply into the PBM segment. There was initial expectation that the learnings from adalimumab and the measures of the Biden administration against this in transparent PBM processes would create sufficient tailwind for ustekinumab biosimilar landscape to evolve differently to adalimumab and -- different to adalimumab gained traction already at less aggressive discount rate that needs obviously more time. And as said, the Trump administration and many of the new members have indicated already clearly that they are on this topic and the American citizens expect something to happen here. Besides the challenges that have to be removed over time, we have also huge opportunities, which we can grasp and harvest. The regulatory framework for biosimilars is evolving and providing opportunities as we could communicate on our Phase III waiver in FYB206. Being in the driver seat here among the frontrunners is important and have paid off already and will continue to be in that space. This is creating space for more developments out of our pipeline at the same funding level. This business needs high levels of awareness. We see that every day, it needs flexibility, agility and resilience. And we will -- those are core values and the DNA of our company on top of the scientific expertise. What is unchanged is the high demand for biosimilars and the opportunity, the huge opportunity in this fastest-growing market. Biosimilars have come to stay and they are globally a very attractive growth space and the key growth pillar for many big commercial players. Our strong capabilities and the proven track record with the additional approval last year heavily underlined as a development engine make us an attractive strategic partner, which helps all the players address the huge pipeline demand and address the untapped needs. So in a nutshell, we have all the ingredients in place to take a leading position together with our commercialization partner. And I want to emphasize in the end, again that despite the current adjustments for 201 and 202. We firmly believe in the future of biosimilars, and we firmly believe in the future of Formycon. Our mission remains unchanged, helping patients and creating sustainable value from our biosimilars and also the adjusted numbers are supporting that. I'm pretty sure that there will be some more questions from the audience around all the 3 topics and summaries we mentioned. And with that, I would like to hand back to the moderator with the ask to start the Q&A section.

[Operator Instructions] And first up is Christian Ehmann from Warburg Research.

So I think the most important one at the moment is, do you see these Phase III waiver as a kind of FDA policy change? I mean, you told us about the quality of your data set and discussions with the FDA. Do you see that this is going to get broader adoption? Or is it just, let's say, an advantage that Formycon had in this particular instance. And my second question would be towards, can you give us a little bit more of an idea for our models for the time line changes. So what kind of, let's say, stop of sale, can we expect for FYB201, especially in 2025. And considering the event from today, how does this affect your breakeven ambitions for the next years on EBITDA level?

Yes. Thank you, Christian, for those questions, which are definitely justified and interesting for a complete audience. Let me start with the Phase III waiver and I'll start, and then we'll hand over to the expert, Andreas. So the Phase III waiver of course, underlines the tendency of the agencies that we see already starting with MHRA that started first and then a bit EMA and now also FDA and I think we will see -- start seeing more of those advisers and more of those tenancy. It's still affecting -- 2 components are necessary to get a waiver. And the one is that the molecule applies or is applicable for a waiver, that's not justified and Andreas can comment on that later. And the other part is, the data set that you deliver to convince the authority that there is no concern at all without the confirmatory study. So we will see, in a nutshell, more tendency like that, but it will not be for every product and not be for every applicant. Andreas, you want to add something here?

Yes, probably, I may ask that -- we have seen this for other checkpoint inhibitor monoclonal antibodies such as nivolumab. There might be also a development going in this direction. So there were some announcement of the press releases for nivolumab last year. So therefore, we believe there is a tendency now of FDA to waive such type of Phase III studies more easily. However, as long as there is no biosimilar guideline change published, we believe that for each and every program and each and every company has to ask for a scientific advice for their program on the basis of the proposed justifications for a waiver of the Phase III study and on the basis of the clinical -- of the analytical data, which were presented, FDA will decide them on this.

Yes. Thanks, Andreas. Before I hand over to Enno for the breakeven. I mean just a quick answer on the time line of the intermediate pausing of commercialization there, I would have to ask for your understanding that I cannot comment on that. This is competitive knowledge, and this is in -- let's say, pricing and commercialization is clearly with the commercialization partners. Now Enno on the breakeven.

Yes. Maybe this was 2 questions, Christian. First of all, on the 201 guidance where we were initially also expected a positive contribution from 201 in 2025 in total from an equity result perspective probably in the high single digits. Whereas we probably now would be looking more or less at 0, I'm assuming. Obviously, that requires further evaluation and internal discussion also aligning with our partners, but as an indicator that may be helpful for your modeling. Obviously then hopefully, resuming in the subsequent times. On the breakeven, of course, we remain with our guidance as I just said that in the midterm, we want to become EBITDA profitable. However, this obviously may still in total, slip a little bit compared to what we still planned a while ago, so that we are currently evaluating numbers for '26 and '27 going forward. But probably in this range, this should be fairly feasible.

A follow-up, if I may, just to clarify, the positive contribution from 201 in 2025 down to 0? Is it from U.S. or -- U.S. alone or from all of the world?

Yes. That's an important point. Thanks for bringing that up, Christian, to make it clear that there's no impact on outside U.S. countries. So this is only limited to U.S. This measure -- and therefore, this has no implication on the other markets. And also, it has not been initiated yet. So that means that the first months, of course, will be irrelevant in sales as well.

And now we're coming to the next question now. It is Ben Thielmann from Berenberg.

Ben from Berenberg. Three questions from my side. Maybe we can take them one by one. First question is on U.S. pricing or on the discount for the biosimilar to Stelara. Can you maybe help us understand about what magnitude are we talking here? Is it that initially you expected 40% discount compared to the reference drug and now we're talking about 70% discount where you say the 10%, 20% delta. Any color on that topic would be helpful.

Yes. Thanks, Ben. Yes, that's a difficult question because we are in the hottest launch preparation as we speak. And of course, as I said, pricing is a strategic thing and that is with the commercial partners. And of course, it would be a competitive disadvantage if we indicate already what the pricing strategy will be of Fresenius Kabi. So I ask you for your understanding that we cannot share any details. Of course, the -- I mean, we will see in the weeks to come, how this will evolve. But for the moment, this is everything we can say here.

Okay. Okay. Fair. Maybe second question on Sandoz. It's a bit weird now that they -- it was quite a sudden move, they put on. I mean, they become commercialization partner in January 2024 and how they decide that they could potentially pause the distribution in the United States. How did that conversation go? Like what did they say? I mean they probably did the due diligence a year ago. And now suddenly, they're saying it is enrolling stronger than they expected.

I mean this is, as explained, there is a life cycle management in this buy-and-bill market for every product, and that starts already with the first day of launch. So it was an evolvement already started in the first 2, 2.5 years, and that was a period of ramping up, gaining significant market share, where Coherus was very successfully dealing with or preparing and also Sandoz continue that path and it would have been independent from the partner now the moment to reflect and see how does that ASP development go to. And that needs always adjustment in strategy and this is happening now. So this is not kind of surprised. Of course, you can choose a lot of different scenarios and tactics. It's not a surprise that you have to adjust, of course, which measure you take and which tactics you choose, that's up to the commercial part. And there are several ones. And as I indicated in my introductory comment, you see that with many products in the market that many players choose different ways to manage the ASP.

Okay. And what are your chances, or your opportunities in adopting to that Sandoz approach. Like could you step back from the contract with Sandoz as a commercialization partner and choose a new one? Or what is the strategy here?

I mean we are fully in collaboration -- close collaboration with our commercialization partner. As I said, I mean, every commercialization partner would have to take appropriate steps along the management of this product in the life cycle. So with that, I mean, there is no dispute in anything that goes beyond that collaboration.

And we're coming to the next questioner, it's Alistair Campbell from RBC.

A couple, please, if possible. On FYB202, my understanding is that relationship is more of a profit share, if I'm correct. So do we need to think about this involving an adjustment to peak sales expectations but possibly also an adjustment to the profitability and therefore, the percentage you retain in sales as a profit share? And the second question is on 206. Just to get a sense of given the developments now going forward from here, does this perhaps put you under more pressure to see if you can find a commercial partner for the 206 program sooner and therefore, begin to crystallize developmental milestones. And then just on the final question, if you could talk to current cash balance and how you see the cash runway through to profitability, do you feel that you've got sufficient balance sheet strength right now.

Again, a couple A couple of questions. So if I got it right, the first question was on 202 profit shares. So what we communicated is that we share more or less equal the profit share, so that will not remain, that will not change -- this balance. And with 206 commercial partner, I mean, we are -- and I probably have to hand over to Nicola, who is discussing with many different parties, we are in talks for 206 that hasn't changed the urgency to partner. Of course, the lower budget, a significantly low budget and acceleration we see makes the product even more attractive for partners. But please, Nicola, chime in.

Yes, Alistair. I think there is no real change in our strategy. We are talking to companies about these assets and the fact that we have now a change in -- clinical strategy does not change that. We want to find the best potential partner per region. And some -- we are busy securing that, and there is -- this was the plan anyway for this year and it's not changing.

And then finally, number 4 to -- goes to Enno.

Which is about the cash runway. And here, I mean what I can confirm on what is basically unchanged to what we also said in earlier calls or comments is that we will once again check on our growing concern, which we are very optimistic that this will be confirmed for 2024 year-end. So this means that this will be confirmed at the end of March that at least we should have cash reached into Q2 2026 based on our results and our cash available amounts. And everything beyond that, in any case, independent whether it's the old case, if you will, or the new case would have been really depending on the performance of the assets. So therefore, no change here really on our cash reach outlook.

The next question comes from Eduardo Martinez from H.C. Wainwright.

This is Eduardo on for Yi Chan from H.C. Wainwright. I was just curious if you could provide any more color. You've alluded to this in the previous questions on the time line for approval and commercialization for 206. I'm curious if this obviously would expedite that process and impact on projections.

Yes. Maybe I'll start, and then Andreas might chime in. I mean time line, of course, now the Phase III was removed from the critical path, so it will -- this Phase III waiver will enable us to accelerate the submission. Of course, we also always have to consider that it's not only the clinical data you need, you also have to generate manufacturing data, you need stability. So there's quite also some activities that need a certain range that you have a manufacturing process that generates a stable product and that you can prove that to the authorities. So all in all, we expect that this accelerates our submission and approval, but we have to consider this does help us, of course, to go earlier into the litigation so-called patents dance, but we still have to respect the patent expiries that are out there.

I think -- do you have...

There's not much to add here.

I see. So it would still be -- we're expecting 2026?

No. 2026 for approval.

No, no, no. The LOEs in U.S. is '29 and Europe is a bit later. So what we have in our time line is always that you have with a certain buffer deducting the time for the regulatory procedure. So you would have to submit to be on time for mid-29, you would be submitted in the ballpark of start '28, and we will definitely be able to submit earlier, but that's -- as said, it will help you to safeguard an earlier approval and maybe as a launch in patent free countries but not in the U.S. and not in Europe. Again, advantage for starting the patent earlier. That's always an advantage.

Got it. And then if I could add one more. I'm just curious if any of these developments open doors for renegotiating any of your agreements with your commercial partners? And if that's something you'd be even interested in?

You mean the Phase III waiver or in general?

Well, primarily probably for your either Phase III, but maybe your existing commercialization partner, Sandoz and Fresenius.

I mean the current price expectations or market expectations.

No, the commercial terms with Fresenius Kabi and Sandoz to be renegotiated.

I mean we don't see a need for that. Of course, there we have some flexibility in the terms if we talk about tender or whatever, which needs special dedication, but the overall terms, there's no demand for renegotiation.

The next question comes from Alexander Galitsa from Hauck Aufhäuser Investment Banking.

Just a couple of follow-ups. First one is on U.S. commercialization of CIMERLI. Just to follow up here. I mean, you do say that Bioeq is exploring alternative commercialization strategies for the U.S. Just to kind of understand what's your sort of flexibility here to go sort of different paths. And maybe you can remind us whether that has been exclusive or semi-exclusive licensing with Sandoz. Just in case, if Sandoz decides on A, is there any flexibility for you at all to deviate from that path? That's the first one.

Yes. Alex. No, there -- this is an exclusive valid contract with Sandoz. So the flexibility in the different scenarios are always in close collaboration with Sandoz. And there are, of course, as you may imagine, a lot of different scenarios, also Sandoz was reflecting on, and is reflecting on. And just Ed mentioned prefilled syringe as additional dosage from presentation, there are others, a bundle of different measures that could be discussed, but always in collaboration with Sandoz.

That's understood. And then also a question on the waiver for Phase III study. I just wonder whether this is going to, in any way, impact sort of the usual framework we have for milestones, whether milestones for the product will get smaller correspondent because of that or you don't expect that to happen?

And this one, I hand over to Nicola, who is negotiating.

Yes, so the milestones are always a reflection of, of course, the time point when you partner, the later we partner, the higher the milestones. But there is no direct and of course, it's also somehow influenced by your investment by your overall investment, but I don't see now any clear view or any clear position that we will deviate from our current plan, what we have in mind in terms of milestone payments for those products. It's a mixture of upfront on milestone payments. And then what you get is royalty share in the back half. So these are the main criteria for such deal structure.

And then another question is on also the waiver of the Phase III trial. I just wonder what's your general level of confidence that EMA will adapt a similar stance for Keytruda or oncology-related biosimilars.

I'm looking into a very confident eyes of my neighbor. So Andreas.

Yes, we are confident that also other regulatory agencies will change also their philosophy. As mentioned before, in principle, the guidelines also of EMA allow streamlined clinical development approach for biosimilars. However, it was so far not applied in many cases. However, we know that EMA is working on reflection paper since more than one year now, in order to change the general strategy for biosimilar registration and approval, in order to enhance also the approval process and to make these products more available to patients. And we expect in Q2 this year that this position paper will be published. And therefore, we are confident that also these changes in the regulatory environment will help us to get the improvement there.

And the very last one is probably for Enno. With regards to earnouts, if you could give a rough idea by how much do you expect earnouts to be adjusted due to the developments in 201 and 202.

Yes, sure. As I said, I can only give you kind of an indicator at this point in time. But for those who are maybe not so familiar with the structure upfront, these deals, on 201 and 202, conclude basically with 2 parts, if we have such an adjustment of our model. On the one hand side, the impairment of the commercial model, which means kind of a write-down and therefore, triggers a negative impact on our balance sheet and P&L and the net result. And on the other side, we have respective earnout obligations towards the initial sponsor of these 2 developments, namely Athos who get a share of our success that we get in. And obviously, if our expectations go down, also the expectations for the earnout reduces accordingly. So that we have basically 2 counterweighing measures. However, the net impact is overweighing the "savings" on the earnout. And as we said, the net effect for 201 is in the range of low double digit or very low double digits from we see. And there, you can assume that roughly 2/3 are coming from a negative impact from the write-off compensated by 1/3 again, "profit or benefit" from adjustment of the earnout. And for Q2, the earn-out per se on relative side is significantly less compared to 201. So please bear that in mind. We have a significant earnout obligation to 201, but not so high than 202. So that the earnout reduction net is probably in the low double-digit millions that we see here.

The next question comes from Simon Scholes from First Berlin.

I've just got a couple of questions. The first is on the earnouts. So Enno you just mentioned that the earnout on FYB201 is a lot larger than the earnout on FYB202. I think the earnout on FYB202 at the end of '23 was about EUR 50 million. So I was just wondering if you could tell me what the earnout for 201 was? And then also looking at the '23 annual report, you gave a range for expected sales of FYB202 between '25 -- 2025 and 2035 of EUR 127 million to EUR 377 million. I was just wondering what those figures might look like in the 2024 annual report.

Yes. So maybe on the first part, on the earnout, you were referring to 201, right?

I think the earnout on 202 is EUR 52 million. I was just wondering what the earnout on 201 is or was?

Yes. So roughly EUR 155 million used to be, yes. And on FYB202 guidance and outlook, again, also to the comments of Stefan and Nicola at this point in time, I think we should takes some time to carefully review this and also as our partners are in negotiations here. Therefore, we would be cautious to not disclose too many details at this point in time. I think we can catch up on that probably during our Q1 -- sorry, our during our year-end presentation when we also publish our guidance at the end of March, but it's maybe a little bit premature at this point in time. And I hope for your understanding.

[Operator Instructions] There are no further questions. I hand the floor back to the management team.

Yes. Thank you very much for organizing that call, and thank you for the very interesting questions and for your interest in Formycon. We stay tuned. We stay resilient. We stay positive. We stay confident that we are working in a growth segment biosimilars and that we have all ingredients in place to become a global player there and an important player there. So we stay confident and -- of course, stay transparent, and we'll keep you updated on all the events, not only the challenges, but also the big opportunities that are ahead of us. So thanks for your interest and looking forward to our next interaction.