Formycon AG (FYB) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Formycon AG Earnings Call for year 2024. [Operator Instructions] Let me now turn the floor over to Dr. Stefan Glombitza.

Yes. Thank you for your introduction, Ms. Ernst, and good afternoon, good morning, and warm welcome to our earnings call. We appreciate your attendance and, of course, your interest in Formycon. Earlier today, we issued a press release with detailed insights on our year-end figures 2024. And I can say in a nutshell, we are matching the guidance '24 and could even partly exceed the corridors. We want to use this conference now as an opportunity to provide additional context on both the operational achievements and also the financial performance of the past year as well as give an outlook, of course, into the period to come. Enno Spinner, sitting with me here, our CFO, and me will guide you through the key facts in our presentation; and Nicola Mikulcik, our CBO; and Dr. Andreas Seidl, our CSO, will chime in to answer any questions on top of your mind in the following Q&A section. As usual, in those settings, I would like to remind you as a legal disclaimer that today's presentation and the discussion might contain forward-looking statements, which are based on the current expectations and subject to risks and uncertainties that might lead to material differences to the estimates given here. Let's come to our mission and our clear path. After a strong '24, where all important boxes could be ticked in a very reliable manner, 2025 started with headwinds from the U.S. market. Sometimes you have to take one step back and make -- to make 2 steps forward. And our mission remains unchanged, and we have clear plans and capabilities to pull the right levers and transform the company into a sustainable profitability. Biosimilars have come to stay, and there is a gigantic number of biologics out there. And as a matter of fact, many of those opportunities will even remain untapped. We are acting in the fastest-growing segment of pharma. And our mission is to increase access to biologics and play a leading role in this attractive growth space with laser focus on excellence and agility. And we are executing stringently on our strategic plan that hasn't changed. We maximize our assets step by step on our growth trajectory. 2024 was a key element. It was tremendously important for Formycon in the pipeline execution and progress. We could tick all the boxes, as you will see later on and also experience throughout the year. And we prepared the ground for the next ignition stage, which shall turn us into sustainable profitability after having 2 more products from our pipeline introduced in key markets. The recent commercial challenges and financial adjustments have an impact on the transformation period, but the overall positive outlook and attractivity of our pipeline products remains. We target to turn into EBITDA profitability ideally as early as 2026. We have been coming to the highlights of last year. We have been able to communicate a bundle of achievements throughout the year 2024, which underlined altogether the capabilities and reputation of our development engine, delivering reliably on our pipeline assets. And the highlights are summarized on the next slide, just picking the most important one. The multiple milestone achievements are based on a remarkable performance, and I want to use this opportunity also to congratulate and be grateful to the teams that have achieved that. To summarize in a nutshell, 201, we got further approval and launches, and we ramped up the global presence to 20 countries meanwhile. 202 has been approved last year nearly at the same time by FDA and EMA, which was paving the way for the launches that recently happened in U.S. and Europe. 203, our Eylea biosimilar got approved by the FDA mid of '24 and in January this year by the European Commission. With those approvals, just to reflect on those, we have in every FDA and EMA procedure beating the benchmark in average timing for regulatory procedures. And we have been able on top of that in our earlier phase programs to start both Phase I and Phase III clinical programs for our 206 program, KEYTRUDA biosimilar, and we treated the first oncological patients in Q3 last year. But that was not the end. Our clinical and regulatory team continued the dialogue and the intense communication with the U.S. agency with data and arguments. And finally, this resulted in a written scientific advice this year that enables us to waive the Phase III study. This is another landmark and strengthens our position among the frontrunners in this attractive asset. On top, of course, investment savings of more than EUR 75 million also helped. A strong and growing pipeline is key, and that's why we added another portfolio candidate, FYB210, to our attractive pipeline. Last but not least, on November 12, Formycon successfully uplifted to the prime standard and was a few weeks later already prior to Christmas included in the SDAX and is part of the TECDAX now as January of this year. This also marks a significant milestone in the company's capital market strategy because it strengthens the company's visibility and transparency in the global capital markets and supports the future growth strategy. Going through the pipeline details, I want to focus on the late-stage pipeline only for this time because the focus should be on the financial numbers, of course. FYB201 is available in 20 different markets, as I said before, and we are already facing the phenomenon that the adoption and the commercialization of biosimilars are very, very fragmented and market specific, very much depending on the local policy environment and the structural framework in the respective countries. Our commercial partners have been able to gain significant traction for the first biosimilar in the VEGF space across many countries with partly really significant volume share. We see and we saw very predictable structures in support of biosimilars with good penetration rates in most European markets. The U.S. performance also started strong in '24, but market environment for biosimilars is very dynamic and flexible adjustments in the commercial strategies are needed, which led to the decision of our partner, Sandoz, to pause the sales for a limited period and reposition the product and reintroduce them next year in a new strength and a new strategy. While this is happening, of course, we are not pausing. We foster our growth with multiple levers, introducing, for instance, the prefilled syringe in 2025 to European markets, entering further global markets. We have more than 20 regulatory procedures in active mode, further life cycle optimizations, mainly also with a target to drive production costs down and prepare, of course, for a strong reentry in U.S. A few weeks ago, coming to 202 and seeing the nice design of Otulfi commercialized by our partner, Fresenius Kabi, we enjoyed the exciting moment to have the first patients treated with Otulfi. In Europe, we are expecting and observing already a good market penetration in key countries, and we are counting on the reputation and the strength of Fresenius Kabi to gain a good competitive commercial position there. Pharma benefit channel in U.S., and we discussed that for quite some time, is still lagging behind and needs further political pressure to remove the limiting barriers, break the monopolies, and there was recently the Republican submitted a bill on the Patient Before Monopoly Act. So this is -- this shall allow a healthy competition, real competition from biosimilars. So for this launch, we will less see a splash, but we will see Fresenius Kabi building market share incrementally client by client and contract by contract. And they are balancing our partners balancing volume and profitability and targeting also a good mix of PBMs and commercial plans, which makes a lot of sense. So on top of these, what are the growth drivers, of course, building momentum in U.S. and Europe, but we have also other launches in the pipeline. approvals already received in Canada and U.K. and launches, which will add them to our revenues this year already. And further life cycle optimizations are always helpful and needed, reducing the cost of goods further and also adding advantageous product features. Coming to FYB203, our Eylea biosimilar. This product is waiting in the wings, and we are preparing the moment when the launches will add to our revenues. Three things we can do now, gaining approvals, of course, in as many additional countries as possible. We got already U.S. and Europe, but others are in the pipeline as well, signing commercial contracts. And there, we have -- there have been some signatures added already like, for instance, Lotus for EPAC and more to come. And preparing the supply chain, of course, in accordance with the IP procedures and litigation activities. Pipeline execution and expansion is creating the grounds for commercial, but also for financial performance, which is key on our growth trajectory. And with that, that's the perfect handover to the financial numbers and to Enno, who will guide you through the financial numbers of the year '25 and outlook '25.

Yes. Thank you, Stefan. And also from my end, a very warm welcome to you attending here to the year-end 2024 call. We are looking back at solid and positive operational and financial performance for the full year 2024, and let me guide you through some of the details on the next pages. Comparing our 2024 financial results against our 2024 guidance, we have performed very well and ticked all boxes, partially coming out actually even better than anticipated. And this despite some unexpected challenges we were facing in Q4 2024. With sales and EBITDA, we have now 2 operational KPIs, which came out above the targeted corridor, while our adjusted EBITDA made it roughly to the middle of our expected range. Sales were higher than expected, mainly due to one-off product sale, which we received from our partner, Fresenius Kabi, during Q4, taking over material, which had been remained in our shelves, plus an early approval of our FYB202 led to an accelerated deferred revenue recognition of respective milestone payments in 2024. EBITDA was obviously positively influenced by these same effects that I just described. And the adjusted EBITDA is mainly reflecting the equity result from our FY201/Bioeq performance, which performed well, especially during the first 3 quarters of 2024. With FYB201 performing weaker in Q4, initially planned adjusted EBITDA performed a little bit less in that particular quarter. Working capital turned out to be significantly above our guidance, mainly triggered by an earlier-than-expected European approval for FYB202 and consequently realizing revenue and receiving the milestone payments still in 2024. Additionally, invest into -- sorry, into FYB206 moved a bit slower than expected, especially in the last part of 2024, saving us some CapEx at that point in time. Let's take a look at some of the details of our P&L for 2024 and starting with the revenues. Overall, there were no surprises on revenues in 2024. They reduced as expected and as guided by approximately 10%, which is, however, a slightly less of a reduction than what we anticipated. Our revenues are consisting of 4 pillars in 2024, which I will describe in an analysis in more detail on the following page. Looking at the cost of sales. While costs for development services have been reduced as anticipated with FYB202 now being approved for major markets like U.S. and Europe, the cost of sales for the first time of Formycon contain regular amortization of FYB202, which stands at approximately EUR 7.6 million for the last quarter of 2024. Main R&D drivers are maturing FYB208 and FYB209, while FYB210 has been added as a newcomer during the second half of the reporting year. Thus, the scope of development broadened. Other expenses reflect our increase of capacities across various disciplines like IT, security, HR, legal and compliance, procurement, BD and others. Plus, we experienced increase from consulting activities versus 2023 for exploring strategic and financing opportunities and of course, the uplisting into the Prime Standard. EBITDA is a logical result of the above with reduced revenues, no EUR 10 million Fresenius Kabi signing fee like we saw it in 2023, stable COGS and increased R&D as well as increased SG&A. Adjusted EBITDA for the full year 2024 performance is as expected after H1 was slightly above expectations, but due to the aforementioned performance in this last quarter was slightly reduced. Let me also comment on the net income, which is none of our guiding KPIs. Like last year, the net income experienced some extraordinary effects. And unlike last year, these effects had this time a negative prefix. And thus, we saw a significant impact of the 2 value adjustments from 202 and 201. In 2024, CapEx included FYB206 only with expenditure for clinical Phase I and Phase III study trial activities. Looking at the breakdown of the sales a little bit closer. The structure of our sales continues to change, as already mentioned in our Q3 report as well. As mentioned, our sales do consist of 4 current pillars. And while revenues from services or compensation for development work, for example, for 201 or 203 continues to reduce as expected due to the fading development activities, deferred upfront payments and milestone payments for FYB202 from Fresenius Kabi also reduced and finally concluded in 2024. Both factors were expected to move into this direction. And please also bear in mind that in 2023, the shown EUR 37.7 million included EUR 10 million upfront from -- as an upfront payment for Fresenius Kabi. Royalties for FYB201 continued to go up with a particular strong first half of the year. Actually, we were aiming for even higher numbers here, but the price drop in the U.S. in Q4 counteracted. We also recognized a onetime product sale of almost EUR 10 million in Q4 2024 from remaining material for FYB202 development, which we passed on to our partner, Fresenius Kabi, as already mentioned in our Q3 call. Looking at the cost of sales, the main stake in cost of sales in 2024 are the cost of sales for FYB202, which increased significantly. And again, this position for the first time includes almost EUR 8 million of regular amortization. Starting point for the planned amortization was the completed approval for Europe and for the U.S. as the major markets end of Q3 2024 and therefore, getting the product ready to use. Cost of sales for FYB201 and FYB203 in total reduced from approximately EUR 30 million or EUR 33 million to EUR 25 million and will continue to do so in the future. On the next 2 slides, let's focus on the value adjustments on our 2 assets, FYB201 and FYB202, which we preannounced recently and where we promised to show more precise numbers. Regarding FYB201, the value of our product is mainly reflected in our 50% joint venture holding in Bioeq AG. Based on the information that Sandoz intends to pause the product sales in the U.S. for approximately 1 year starting at the end of Q1 2025, plus observing the accelerating price reduction in the U.S., we were forced to review our current assumptions and adjusted our underlying models. This led to a EUR 28 million impairment as indicated on the slide. A counter directional effect comes from our earn-out obligations, which obviously also reduce if we reduce the overall model. This effect partially compensates for the impairment of our joint venture holding. Consequently, netting the different effects, we are looking at an adjustment of minus EUR 13 million with a solid EUR 88 million of value remaining to the benefit of [indiscernible]. This also nicely indicates that we remain positive regarding performance expectations from resuming U.S. as well as from accelerating Europe and other expanding regions such as MENA and LatAm. Let's move to FYB202, which from an accounting point of view is the more significant impact. Here, we are looking at a so-called cash-generating unit, CGU, which is consisting of different lines, which all have been affected by our impairment. While goodwill has been taken out completely, the intangible asset FYB202 as such, was adjusted down to EUR 392 million. This effect is partially counterbalanced by an adjustment of expected tax liabilities. Also on the positive side is an adjustment of our minor earn-out obligations, which nets the net impact to minus EUR 74 million, while we remain with a net valuation of EUR 0.25 billion for the asset in total. Please remember, both adjustments, 201 and 202 do not affect our operational P&L lines nor do these impact our 2024 KPIs or our cash performance during the reporting period. The updated valuation also indicates that we continue to plan with significant performance expectations to be delivered from both assets over time, contributing to Formycon's growth story and to our midterm profitability. I also would like to draw your attention once again to the netted values of just these 2 assets, which in total sum up to EUR 300 million to EUR 350 million of valuation, and this does not consider FYB203 or very promising FYB206, which comes at a decent value. It also does not count our basket of earlier opportunities such as 208, 209, 210. And of course, it does not mention the platform Formycon has developed over time, technically enabling us to develop almost any biosimilar on a high-quality level. Let's review our usual balance sheet KPIs. Balance sheet total reduced but remains at a strong EUR 770 million balance sheet total and the development is driven by 3 main factors. On the one hand side, the share issue of more than EUR 80 million versus the just described impairments with a balance sheet impact of EUR 156 million. Further decrease came from the received partial repayments of the Bioeq loan totaling EUR 27.3 million. Change in liabilities include the repayment of the shareholder loans with minus EUR 21 million at the end of Q1 '24 and again, minus EUR 20 million of earn-out payments, which we paid back to ATHOS. Plus the decrease in fair values reduced earn-out obligations and the reduction of deferred tax liabilities also adds to this position. Our equity ratio remains very solid, whereas the share issue contributed to the positive change. Noncurrent assets versus balance sheet total overall remain fairly stable around 90% and show that most of our assets are clearly long-term oriented. Increased cash and cash equivalents, I will comment on the next page. So cash and cash equivalents increased by EUR 15 million against year-end 2023 due to the capital increase and despite operational spending, CapEx as well as early repayments of shareholder loan and earn-out obligations. Cash position was influenced by, again, the shareholder increase by Gedeon Richter joining us, minus EUR 14 million EBITDA, repayment of the shareholder loan and the paid earn-outs as just described and return receiving payments from Bioeq reducing the shareholder loan. Regarding our working capital, we see current receivables and revenue accruals adding to our cash position, while moderate current liabilities and accruals reduce our working capital. Therefore, we do see working capital being even stronger than our cash position at this stage. Please be reminded that we continue to hold a EUR 48 million credit line by our major shareholder, ATHOS and AOC, which currently remains completely untapped, but may be partially used during the period of '25 and/or '26. Now let's switch gears from looking backwards to our now outlook and guidance for 2025. Overall, Formycon expects a comparably -- a comparable development of the key financial figures in 2025 versus 2026. The market launch of FYB202 in the U.S. and in Europe is expected to provide new revenue momentum and revenue expectations of EUR 55 million to EUR 65 million include license income from 201, especially in Q1 2025, then temporarily being paused in the U.S., but not in other regions of the world. FYB202 revenues are expected from success share from the U.S. as well as from Europe, seeing first sales, as Stefan just described, from our Stelara biosimilar. Furthermore, there are still some cost recharges expected for FYB201 and FYB203, however, on a lower level than in the previous years. And last but not least, we are aiming for some first partnering activities for FYB206, ideally resulting in respective upfront payments, which we then could recognize accordingly. EBITDA will be in the range of minus EUR 10 million to minus EUR 20 million, thus a slight improvement against 2024. Next to the revenue, this reflects the continued investment in the advancing biosimilar pipeline. And please also here remember, FYB206 has a neutral effect on the EBITDA due to the capitalization of the costs incurred. And also FYB208 may switch to capitalization once completing TPOS during the course, hopefully of this year. Adjusted EBITDA is expected to be below 2024 performance due to the aforementioned pause of sales and marketing in the U.S. of 201. Since the majority of this performance is recognized through our at equity result, this will have a clear impact on our at equity and subsequently adjusted EBITDA result. Working capital is expected to be in the range of EUR 25 million to EUR 35 million, largely influenced by the continued investment in FYB206 as a project. That said, expected savings from the waive Phase III trial will reduce related cash needs by more than EUR 75 million over the next 4 years. Thus, a very significant burden taken off our shoulders from a cash perspective. Our working capital assumptions also include a partial drawdown, as I mentioned, of our undrawn shareholder loan. We also want to be a bit more precise on our midterm outlook. Formycon continues to pursue the goal of sustainable and EBITDA profitable corporate development. Therefore, management currently expects that a positive EBITDA can ideally be already achieved as early as 2026, but in any case, no later than 2027. The following criteria are the key drivers for achieving this goal. FYB201 resuming marketing in the U.S. after the planned pause, plus increasing market penetration in regions already developed through the introduction of the prefilled syringe as well as expansion into further markets like, for instance, the LatAm region. FYB202 gaining share in key markets such as the U.S., Europe, Canada, U.K. and others, achieving clarification of the patent situation and/or achieving an arrangement with the patent holder of the reference drug for FYB203 to allow midterm market launch. And finally, concluding with first regional or global commercialization partnerships for FYB203 -- sorry, 206 and midterm subsequently FYB208 as well. Looking at our shareholder base and our share activities, we have established successfully our uplisting in November 2024. We have been integrated into the SDAX at the end of December and also being introduced to the TecDAX at mid-January of this year. Recently, we have seen a significant increase of our average daily trading volume, which already started picking up based on our uplisting and becoming a member of the SDAX and the TecDAX. But admittedly, of course, also the recent news flow and respective market reactions increased liquidity significantly. No changes in voting rights were reported by our anchor investors and free float remains at around 40% as in previous reports. Also, the setup of our analysts remains unchanged, whereas most analysts updated their models recently on the latest news, Street consensus adjusted accordingly. We currently do invest a lot of time into direct dialogues and interaction with shareholders, with investors and media to provide more in-depth color with respect to our recent news flow, being fully aware that these news were at minimum partially surprising and very complex to understand. We also plan to be on the road at conferences and roadshows during Q2, looking forward to meeting you at some of these events for a continued dialogue and conversation. And with that said, I conclude my part of the presentation and hand back to Stefan. Thank you very much.

Yes. Thank you, Enno, for providing us a lot of details on the financial numbers. As lined out throughout the presentation, our teams executed at full steam and delivered reliably in 2024 across multiple areas. And the next important milestones for '25 are approaching already. 3 months into the year, you see that we could tick already important boxes, starting with a super important launch of Otulfi in U.S. and Europe as well as approvals in Canada and U.K. for the same product, which are supposed to lead to market revenue still this year and also the 203 EC approval as the last procedural step after receiving last year the positive CHMP opinion. And there will be many more to come, like, for instance, further 201 approvals in LatAm, and this is specifically important because it's tackling a new geography with high unmet need. 203 closing all the open spots in the global map of commercial partnerships across the main geographies. We're going to lift the secret around the molecule and the reference product behind 208. And with the launch of a very complex to make ophthalmologic prefilled syringe, we expect the push in market adoption for important European countries for FYB201. And last but not least, very good news on the Phase III waiver and our competitive strong positioning among the KEYTRUDA biosimilar developers together with a very well progressing Phase I PK study recruitment creates commercial attractivity around this asset. And this builds a good basis for, as Enno mentioned, starting partnerships already this year. So in essence, you can expect and trust that this operational momentum will continue, generating further positive news flow as a lifeblood on our growth path. To summarize, 2024 was another bold proof for the excellence and the focus of our pure-play R&D engine. And with 3 pipeline assets approved and a strong and progressing pipeline, we created a robust platform. And 2024 added to that track record and to the attractiveness for commercial partners that are seeking for biosimilars in their portfolio from our hands. And we believe we have all the ingredients in place. We have a clear plan to adjust also to any headwinds, move on and maximize our assets. Biosimilars have come to stay. and we have prepared the ground for the next stage of Formycon's growth story in this attractive phase. Thank you for your attention. With that, I want to conclude our presentation and hand over to the moderator for the Q&A section.

[Operator Instructions] And the first question comes from Ben Thielmann from Berenberg.

Can you hear me?

Very well.

Okay. Good. A few questions from my side. First one would be on FYB201. You mentioned already that the chance of being profitable on EBITDA in 2026, of course, depends on what is Sandoz doing with the U.S. distribution regarding the Lucentis biosimilar. I was just wondering if you could give us an update on the situation. Did you speak with Sandoz lately? What could be a blue sky scenario regarding that? How long is it usually that they temporarily pause it? I know Sandoz did that in the past already. So maybe some color on that topic would be very helpful.

Yes. Thanks, Ben immediately hand over to Nicola. I just can confirm we are in constant interaction with Sandoz. So please, Nicola.

So thanks for your question. So we are talking to Sandoz a lot about the situation, of course, in the U.S. and we rely on the fact that they know best what to do with this product. I cannot, of course, share completely the strategy because this is, first of all, there is still some discussion also within Sandoz. And second, this also has, of course, a competitive element. So -- and you mentioned Sandoz did that already in the past. So they have experience with this strategy. I mean the reason why that is necessary is that the reimbursement price of the product is going down. And with that going down, you cannot give sufficient rebate anymore at a certain point in time, which means that customers switch from Cimerli to other products in that category. And to basically to stop this downward trend of the reimbursement level and to, at some point, make the product again sustainable in the market, that was the reason why Sandoz decided to pause the commercialization. Of course, one element of the strategy is that this price spiral going down will be interrupted. But there are also some other considerations going on regarding customer segments and so on. I mean, also in the U.S., we have a prefilled syringe in the making and in the procedure. So that also plays a role here. But please understand that we cannot go into more details here just because some of this is also created as we speak.

Yes. No, totally understand it. That was helpful. Maybe another question [indiscernible]. I think, Stefan, you mentioned that -- or Enno, you mentioned that the EBITDA trajectory also depends on entering new regions. And I was wondering, is it likely that maybe in 2025, we already see with one of your commercialization partners, for example, MS Pharma, that you will announce further expansion in, let's say, what we call emerging markets, or whether that will be skewed more towards 2026.

Ben, you're referring to 202 or 203, I didn't. ..

Sorry. Yes. 201.

Yes 201. We are expanding in 20 countries are not enough. We are running more than 20 procedures in total for smaller and bigger countries in Lat Am, but also in MENA region. And so there will be more to be expected. Of course, the price levels are different partly, but you also should not underestimate that there are also in these regions, you can have decent prices partly. What is for sure in those regions is that there is unmet need. And we see that with every interaction also into people in Africa and Latin America. There is a high need and they are waiting for our biosimilars -- and what speaks to us is also that we have proven in those 20 countries for 2 and more years that we have a very robust product supply and that along the life cycle, we're also getting into more and more competitive cost of goods. So that enables us to enter in those countries as well.

Okay. That is helpful, thank you Stefan. Maybe one more question on the allocated costs, maybe related to your early-stage assets, FYB208. If I look at your segment P&L or P&L by biosimilar, you see that the allocated cost for FI208 increased significantly in '24 compared to the previous years. Maybe, you could guide us a little bit what cost run rate can we expect in 2025? And are these costs maybe one of the drivers for EBITDA remaining negative in 2025? Or is this really particularly driven by the pause of Sandoz?

Well, it's basically a mix of different factors, obviously. But indeed, speaking of 208 first, maybe, here, we see the most significant invest coming out of the continued development pipeline that you will see in the P&L on the R&D line. Because as I mentioned, 206 will be fully capitalized on the balance sheet. And for 208, at least in the first half of the year, we have anticipated these costs under R&D, which is still single digit, but it is a significant amount for that half year. And then it depends on how we can progress towards the clinic going forward.

Okay. I mean, what is a good signal, although increasing cost is always nothing nice for. But I mean that shows that we really having good progress with that program, and it gets more costly, means we enter clinical stages, and we also enter into scale up in production. And that's the main cost drivers, and that's also then a signal that the product is really moving on as we speak.

Yes. No, no, I fully agree. Stefan. It was just a little bit for modeling purposes. But -- that was helpful. Maybe one last question, and then I go back into the queue and give some time for the investors and the analysts. In 2024, there was roughly EUR 18.6 million positive tax effect due to what was called a capitalization of certain internally generated intangible assets. And I was just wondering if you could tell me real quick what that means in easy words. Is that something like a deferred tax liability that we should expect to be reverting in 2025 or 2026.

Can you repeat the first part of the question? I'm not totally sure I got it.

Yes. So in your group P&L, there was under income tax expense, you recognized EUR 18.6 million. And if I check in the footnotes, the key driver was a EUR 20.9 million item, which was called a deferred tax income or expense from the capitalization of certain internally generated intangible assets, how it was called. And I was just wondering where that is coming from because it was more than 10% of your earnings in 2024.

Yes. So effectively, that's a part that comes from the adjustment of our models, so to say, on -- especially on FYB202, where we also had the slide that you could see previously. And here, the deferred tax that we are assuming over that period, which is then being adjusted basically goes through that line.

The next question comes from Alexander Galitsa from HAIB.

I'll have a few. Maybe the first one, I'm just wondering for your forecast, how high the milestone for 206 needs to be for your sales to come in flat. And also, I'm just wondering why despite the milestone, which in my understanding, could be quite sizable, your guidance for adjusted EBITDA for 2025 is also flat. I will go one by one, if that's fine.

So with regard to the -- I probably would more likely call it an upfront payment because milestones always have a deferred character. And ideally, if we could achieve a deal here, then you get some recognition for the work that you have done already. And in that context, we can recognize these things immediately like we did by the way in the 202 Fresenius Kabi deal where we received EUR 10 million upfront in early 2023 at that point in time. And that's kind of a similar approach here. And I mean we deliberately also mentioned that we are looking at different opportunities either global opportunities or likely as an alternative local opportunities to have a starting point -- and that obviously will also determine the size of such an upfront payment and a potential deal, therefore, leaving more room for several partnerships over time. So it's hard to predict any guidance here or any exact numbers, so to say, at this point in time. Certainly, we are talking about the largest assets today as a therapeutic based on biologics, which generated last year roughly EUR 30 billion in revenues. And therefore, obviously, we would also try to aim for significant overall commercial agreements. And then it's always the question of how do you balance upfront versus milestones versus royalties. So that needs to be discussed. But clearly, we think it should have a significant impact.

And maybe to add on that, we are more looking not to a big bang global deal, but go more regional and also in a kind of staggered approach that makes from our perspective for that asset more sense. And that would explain also that there's not a big bang in the beginning, but constant contributions on significant milestone payments and sign-offs.

Understood. Maybe as a follow-up to that one, if you could provide any color maybe on how do you go about choosing partners, right? Because it's obviously a very important product going to be down the line, how -- maybe you can explain why do you think this strategy makes more sense than to really find a global partner that could really take it and carry it through the commercialization. Any kind of considerations that you pay attention to when selecting this or the other partner?

Yes. Perhaps I can take that question. So of course, the most relevant element is that the biosimilar market as generic markets are still pretty local. So not even in Europe, you have companies who are the strongest in each and every country. So -- and that, of course, even more than is true for when you go then to the U.S. or to even countries more in the, what we call rest of world space. And therefore, from our perspective, for this product, of course, we look for someone who is strong in oncology, in hospital oncology. And as said, there is normally, you find more local or regional players with better market understanding, pricing, customer relationships, payer relationships, distribution network. So this is really all very local in the way how it's organized. And therefore, we believe that it's a better solution for this product to have regional or local partnerships than a big global player.

That's helpful. And then a question on 201. I think, Stefan, you mentioned that on one of the slides that one of the priorities for this product is to prepare for the U.S. reentry. Just wondering here, is there anything to be done on part of Formycon? Or is that entirely in the hands of the partner?

I mean mixed responsibilities, and Nicola might add to that. I mean what we can do, of course, from our capabilities point of view, the best one to do is the adding the preferred syringe as a presentation and prepared for that. So that's the one thing. Of course, also preparing, keeping the supply chain, inventory, everything doing life cycle management in the production. That's all where we can have a direct impact also together with our partner in [ Bioeq ] pro forma. Other than that, we have Nicola's constant interactions on how to enter, reenter in a stronger position, but that's then the final responsibility of our commercial partner to prepare the payers and all the network of interactions you need for the commercial market to prepare for that relaunch. Nicola, anything to add?

No. I mean, really, the commercial strategy is with Sandoz. And yes, we rely on their expertise, especially in this buy-and-bill market. They have other products there. So we rely on the fact that they know what the best strategy in this situation is. And but we are in very close interactions on all the time.

And there are patient support programs and whatnot that have to be continued to contributed. And they did that for pegfilgrastim successfully now. They know how to do it.

Regarding prefilled syringe, could you remind us like I understand that 2025 will see a launch in Europe? What is the situation in the U.S.?

Yes. Obviously, that's -- we can only do the preparation. If the product is off the market, that also is, of course, valid and pause is valid for the prefilled syringe as well because the ASP mechanism and so on that affects the prefilled syringe as well. So that's a separate procedure, of course, with the FDA compared to EMA, but the pausing is for both presentations, of course, in U.S.

Yes, I was looking kind of for if there is a potential time line by when the prefilled syringe could be available in the United States?

It's part of the relaunch strategy of Sandoz. And therefore, I don't see different time lines for the vial versus the syringe.

Okay. Understood. And the last question I have is -- and also, I appreciate the transparency you provided with regards to the balance sheet values. I think that's helpful. Just a question related to this. I guess I wonder by when -- obviously, it's all hinges upon how accessible the market is, how the ramp-up curves look like. What I wonder is really by when do we need to see sort of a shift or an improvement in the market in the U.S. with regards to market access, Fresenius is having more success with the sort of gatekeepers of this market or maybe that these gatekeepers open up more by when this needs to happen for your 201 and 202 model to really hold?

Maybe we split that answer, and I do the part on our modeling and then on the estimate, whether there could be change on the gatekeepers in the U.S., looking at Stefan and Nicola again. That said, I mean, the estimate that we have right now really is the updated estimate, which was also then now the basis for our updated impairments for 201 as well as 202, obviously are derived from an intense dialogue with our partners, namely Sandoz and Fresenius Kabi on the one hand side and also trying to understand their assumptions for the ramp-up or for the relaunch, respectively. That's been incorporated plus doing additional own research and for instance, also now monitoring first data being available from competitors when speaking about 202 where we have seen the respective discounts and the respective ranges. Currently, we are assuming -- or we are assuming our models based on currently -- current available approaches, so to say. So there's no hope in there that PBMs will fall away or something like that, but really trying to really take what we have right now. If there should be a change in that regard that structures are changing here significantly, then this probably would also at least trigger us to review our models and our assumptions together with our partners. But currently, this is not the case. And for the time being now, we have to look how they will perform over the next couple of quarters until we get a really good feel.

And the next question comes from Christian Ehmann Warburg Research.

I was just wondering if you could break down the top line guidance a little bit more for us, so we can get a feeling how impactful, for example, you expect the out partnering for 206 to be so we can get a feeling of what might be, let's say, at risk or what might surprise to the upside for the for the coming fiscal year? That would be my first question.

Yes Christian, I'll take that one, welcome to the call. Of course, we cannot and we will not guide exactly on the precise numbers, but maybe to ring fence a little bit. So certainly, Q1 is probably in the range of roughly 10% performance over the year. Q2 clearly being the heavy weight, which is the most relevant one from a performance perspective, clearly standing above 1/3 and probably 206 being still below 1/3. So really a major impact expected from Q2 in that regard. And then we have some revenues also expected from 203 for service work that we do. I hope that's helpful. But at this point in time, would be too tempting to go into more detail.

And the next question is from Yi Chen H.C. Wainwright.

My first question is if I wonder if you can provide any comment regarding the current Eylea biosimilar on the U.S. market and whether the performance of it suggest that the future market prospects for 203 will be attractive in the U.S.

Yes. So I think you are referring to the biosimilar of Amgen, which is already on the market. I don't have exact numbers, but we know that the product has meanwhile the reimbursement code, and we expect this to be a successful biosimilar because at the moment, it's the only biosimilar competing with Eylea. But we believe that there will be other companies, including us coming when we don't know yet because we are still in litigation. But that there is, for sure, room for more products. And this whole pricing game, which we discussed also in terms of biosimilars through ranibizumab have, again, are relevant here as well. So at the end, it depends then very much on the strategy of each single company. So yes, we clearly believe that the product will have its position in this market and that we can also make up for this time advantage, which we have against Amgen.

No, it's just -- I mean 2 things additionally, I mean, it's the buy-and-bill segment. So this is much more predictable in terms of market penetration, much, much better paving the way for biosimilars since the last many years in the U.S. And number two, it will not be the first product in the ophthalmology space in the VEGF space. So ranibizumab for sure paves the way as well and to create confidence to the retina specialists that's switching to a biosimilar, which happened in more than 50% of the cases for Lucentis doesn't bring any harm and this is equally successful and efficacious.

And with respect to 206, has the waiver of Phase III trial being granted to other developer competitors developing a KEYTRUDA biosimilar. And also, do you expect 206 when it reaches the market to face pricing pressure similar to what 202 is facing right now.

Maybe I'll start with that. So of course, we don't know. I mean we will see in the clinical trial.gov what others are doing and concerning the Phase III study. So, so far, we didn't -- we don't know from any competitor who has got a successful waiver, but that might be in the background. You always -- it's always a single company with specific application. It depends on the analytical data and your argumentation, but we can expect that others will also get a waiver because this molecule is prone for it. And if you have the right data and convincing arguments, you will get -- receive also a waiver. But kind of later than we do because everybody has to run through the process. And price competition for sure, but that's, again, I mean, different segment. That's also buy and bill. Of course, the number of competitors, I don't know if they will be higher than with Stelara, similar ballpark, we can expect, but with different mechanisms as we see in the PBM and Stelara segment.

And the next question is from Ben Thielmann Berenberg.

It's me again. Maybe 1 or 2 more questions, if I may. I was just wondering regarding your equity target for 2025. Because if I look at EBITDA and adjusted EBITDA, it implies that the net equity is expected to be around 0. And I was wondering if you could help us a little bit reconciling that number because even if I assume or if we assume that Sandoz is not selling basically anything in the U.S., you should still have what I assume to be a low single-digit euro million at equity from Teva and MS Pharma. But then I look at Q4 at equity, and when I reconcile that, I think it was negative. So I was wondering if you could help us a little bit in understanding the run rate for your at equity result. Is this really driven that you're just very cautious that Sandoz is taking very long to pause the distribution? Or is it that you're actually quite optimistic, but there are quite some costs that have to be recognized. Any color on that topic would be very helpful.

Yes. No, it's definitely both. However, from calculating, it's really considering the internal cost that we have maintaining with Bioeq as an existing operational entity, but in particular, considering the amortization or the write-off of the development cost associated to that asset, which continues, obviously. And therefore, this is the major part of that associated cost and then again, kind of run rate for Bioeq. That's the 2 parts influencing the equity results because they come in as a consolidation of 50% of that operational entity.

And the next question comes from Christian Ehmann, Warburg Research.

So last time we talked, we talked a little bit about the possibility of the FDA to actually expand the Phase III requirement or the waiver of such requirement for additional biosimilars. And if I remember correctly, you were of the opinion that this is onetime instance and one has to look at this from a case-to-case perspective. Do you still hold this opinion? And do you expect the addition of the industry or the FDA in the future to really stick to Phase III requirements? Has anything changed since then?

Yes, maybe I'll take this one. So I can't remember how I phrased that if it was me. But I mean, it's a specific case-by-case decision, and there will be molecules that will be applicable to that. It also depends on the PD markers, but also, of course, on the data you're showing, it's not only -- it's the Phase I data and the analytical data. But for sure, there will be more cases. And in general, the trend towards agreeing to Phase III waivers will definitely increase.

So one, can I emphasize that if you have really good biomarkers available, which are readily available, you could say, okay, this 1 molecule is more likely have a Phase III requirement with, for example, other ones which don't have biomarkers available?

Probably, I may jump in here. It will not only depend on biomarkers, but also how well the mode of action of, for example, a molecules understood if you have in vitro, bioassays available, which are representative for the mode of action and also for the efficacy to predict efficacy, for example, also the safety profile will be relevant for such type of a decision and how well you can characterize the products in comparison with the reference products. So there are many, many criteria, which will contribute to the decision. And you will always have to discuss this with the regulatory agencies and convince them with your scientific argument that the waiver of a Phase III study can be justified. And depending on your arguments and the data you have generated, for example, on the analytical level, the similarity you have achieved with your biosimilar product and such type of a waiver may be granted or not. Fom competitive intelligence perspective we have heard now, but this is in official that 2 other Phase III studies for pembrolizumab were also stopped now. And we heard also that from -- for an immunology biosimilar product also a Phase III study was stopped. So therefore, we believe there's a clear trend in this direction. But as mentioned by Stefan, the biosimilar companies always will have to discuss this individually for their biosimilar molecule, but also for the class of products, if this is possible or not.

And the last question comes from Alexander Galitsa, HAIB.

Just a really quick one. If you could confirm whether it is your expectation to be first in line to go into the settlement with Merck on KEYTRUDA?

Honestly, not yet a topic we are considering. So this is really too early. So this really starts -- this whole discussion with settlement starts when you file your product before that, there is no reason to entertain such discussion from the [indiscernible] .

That's simply based on the fact that you are seeing to be at least quite a bit ahead of the other companies who develop the product.

Yes, when you -- I mean, when you are ahead with your development and with your submission, then that is a clear signal that you have the product fully developed and that can, of course, have an advantage then on your tactics and also on your timings for settlements.

And as there are no further questions, I hand back over for closing remarks.

Yes. And I make a short closing. So finally, I would like to thank the operator, of course, also our Investor Relations team and my Board colleagues but especially everyone who is joining our earnings call for listening in and also the good questions. And thanks again for your lively interest in Formycon.