Galderma Group AG (GALD) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to Galderma's conference call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Emil Ivanov, Head of Strategy, Investor Relations and ESG to introduce the call. Emil, please go ahead.

Thank you. Warm welcome to the Galderma Q3 2024 trading update call. As customary, the press release was published this morning at 7 a.m. Central European Standard Time today, and you can consult it at any time on our corporate website. Today's presentation slides as well as a recording of the webcast will be made available on our website after the call. Please be advised that today's presentation contains forward-looking statements, which would be treated with the appropriate level of caution as detailed on this slide. Let me now introduce today's Q3 trading update webcast, which is scheduled for approximately 45 minutes. Dr. Flemming Ørnskov, CEO of Galderma, will provide a performance update for the first 9 months of the year including commercial and innovation highlights by product category. Thomas Dittrich, CFO will then cover the trading update and financial outlook for the full year. Both Flemming and Thomas will be available to answer questions from financial analysts before Flemming provides his final remarks to close the webcast. With this, I would like to invite Flemming to start the Galderma Q3 highlights. Flemming, over to you.

Thank you, Emil. Good morning, good afternoon, and welcome to Galderma's trading update for the first 9 months of the year. This month is special for me as I just celebrated 5 years in my role as CEO of Galderma and I cannot be prouder of what the Galderma team has achieved despite multiple external headwinds over the period. Yes, as an avid soccer fan, I know don't dwell on the last game, but prepare for the next one. We still have a lot of exciting games ahead of us. Now focusing on our performance for the first 9 months of the year. 2024 has already been a year of many achievements. Two of those stand out for me. First, Galderma's record net sales results and continued strong growth momentum. We continue to outperform the market based on the focused execution of our unique integrated dermatology strategy despite a challenging economic backbone. Secondly, the important milestones in our innovation pipeline across our product categories. This includes the first approval for nemolizumab in the U.S. for adults with prurigo nodularis commercialized under the brand name of Nemluvio, which is already having tremendous impact on patients' lives as we cover later. Also, first approvals for Relfydess or as some of you may still refer to it, QM-1114, our next-generation liquid neuromodulator as well as the differentiated new lines to the Cetaphil flagship brand. Starting with our trading update highlights for the first 9 months of the year. Galderma achieved a record USD 3.3 billion in net sales for the period, which represents a 9.2% year-on-year growth in constant currency. Let me also highlight that we also achieved a record for the highest third quarter net sales. The growth, which was predominantly driven by volume complemented by a favorable mix was broad-based across our product categories. The strong performance was driven by Injectable Aesthetics and Dermatological Skincare which continued their strong growth momentum with double-digit year-on-year growth at constant currency. Growth is also increasingly driven by Galderma's larger reporting geography, international, which drive 59% of our group sales. International, continued on a robust double-digit growth trajectory, gaining market share in many of our key markets. We have a solid runway for growth in international markets, where we remain significantly underpenetrated. In the U.S., we grew single digits in the first 9 months of the year successfully navigating a softer market environment. Given the operating environment in the U.S. growth in the near future would increasingly be driven by market share gains, which we have already been driving in key parts of our portfolio, notably in neuromodulators with Dysport, biostimulators with Sculptra and in physician dispensed skin care with Alastin as well as from entry into underserved, underpenetrated markets, such as biologics and the fast-growing prurigo nodularis, an atopic dermatitis market with Nemluvio subject to remaining regulatory approvals. As for the full year outlook. In light of the strong performance achieved in the first 9 months of the year and the strong performance expected for the last quarter of the year, we are confirming and also narrowing full year guidance on net sales. Our net sales, as we had last guided towards the upper end of the previously communicated growth range of 7% to 10% at constant currency and are now narrowing the growth range for '24 to 8.8% to 9.5% year-on-year at constant currency. Guidance on core EBITDA margin is confirmed as well with the margin percentage for the year expected to be in line with 2023 at constant currency. Let's now move to the performance update for the period as well as key strategic highlights by product category for the third quarter. Looking at net sales across the portfolio for the first 9 months of the year, Galderma has maintained a strong growth momentum. Let's discuss the growth a bit more in detail before commenting on the Q3 key commercial and innovation highlights. In Injectable Aesthetics, our largest product category, net sales year-on-year growth was up 10.6% at constant currency. Both soft categories achieved double-digit growth with neuromodulators up 10.4% and Fillers and biostimulators up 10.9%. Despite market softness in key markets, there was strong performance in both international markets and in the U.S. Our broad and differentiated portfolio, our focused execution with expansion in underpenetrated markets as well as market-leading education and services continue to be the drivers of growth. In Dermatological Skincare with our 2 flagship brands, Cetaphil and Alastin, growth for the period was up 10.6%. Cetaphil growth was driven primarily by international markets, which more than offset lower consumer consumption in the U.S., where we are reenergizing the brand and the execution of our commercial strategies, as we'll see later, while Alastin continued its strong U.S. growth across channels. In Therapeutic Dermatology, growth was up 2.9%, mainly driven by continued momentum in international markets, which offset the anticipated decline in the U.S. impacted by ongoing genericization. This trajectory is in line with expectations. As you may recall, we don't expect therapeutic dermatology, excluding Nemluvio, to be a contributor of growth in the midterm. Now on a geographic level, there was continued double-digit growth momentum in international markets with growth up 14.5%, fueled by strong performance in major markets. The U.S. grew 2.5% despite a softer market environment impacted by the continued softness in fillers, lower consumer consumption in dermatological skin care market segment impacting our Cetaphil business and ongoing genericization of our mature therapeutic dermatology portfolio. The U.S. recorded its first sales for Nemluvio, which was made available in August after the U.S. FDA approval with priority review for adults with prurigo nodularis. Bringing to market Nemluvio sets us up for strong growth in Therapeutic Dermatology as well as in the U.S. I will share more on these first weeks later in the webcast. Let me now comment on the strong progress we made during the third quarter of 2024 across our blockbuster platforms, securing key regulatory approvals and launching new products expected to further fuel growth and its trajectory. Let's look into each of these on the next slide. Starting with Injectable Aesthetics, let's look at highlights, focus on our market-leading innovation and in-market execution with a focus on education and services. Third, Relfydess received a positive decision for use in Europe, along with approvals for 5 European markets already, which followed the approval earlier this year in Australia. With these approvals, Galderma is on track for the first launches of Relfydess by the first quarter of '25. Relfydess pioneering the next generation of aesthetics provides a fully differentiated profile in neuromodulators for the treatment of moderate to severe glabellar lines, you may know that as frown lines and lateral canthal lines or Crow's feet with its durable result, rapid onset of action, convenient and consistent liquid ready-to-use formulation as well as clean and green formulation. Second, Sculptra, one of the fastest-growing brands in our portfolio continued its geographic expansion following a very successful launch in Thailand earlier this year. We have now received approval for Sculptra in China, one of the world's fastest-growing aesthetics market. As the first and the original bio stimulator with a unique PLLA-SCA formulation that activates the skin's natural power to revitalize collagen production from more youthful appearance, Sculptra further completes our portfolio offering in China, where we continue to grow at a fast pace in an underpenetrated market. Third, Galderma continues to expand its market-leading education and services, which included leading presence at medical congresses proprietary gain events, the Galderma aesthetic injector network. Notably, Galderma hosted its annual game Latin America event this year in Mexico and had nearly 700 health care professionals in attendance with a targeted scientific agenda, a leading faculty of 17 key opinion leaders address key trends over the 2A program, growing our game connect educational platform for health care professionals, growing both reach and content with over 24,000 health care professionals registered up nearly 60% compared to the beginning of the year. Deepening penetration of face by Galderma, our exclusive visualization consultation tool to see the after before with already over 70% growth in registered health care professionals compared to the beginning of the year. Now at over 2,000 health care professionals while we continue to roll out the solution into new markets. Overall, in Injectable Aesthetics, growth continued to be driven by strong brand performance and scaling execution across our portfolio, along with increasingly penetrating in terms of geographic reach, portfolio breadth as well as health care professional's education and training. Let's now move to highlight for dermatological skin care focused on differentiated innovation and upgraded execution across channels with a digital-first advocacy driven activation. Starting with the last, our leading pair of prestigious skincare brand and strong complement to our injectable aesthetics business, we are continuing to expand our national footprint with launches in Brazil and in Colombia, emphasizing the power of our integrated dermatology strategy, the recent gain Latin America did, which I commented on earlier, also provided a great platform to showcase Alastin to leading health care professionals in that region. We leverage all relevant opportunities to showcase our full portfolio, a key pillar of our unique strategy. Another recent example was the showcase of Cetaphil and our thought leadership on sensitive skin with scientific presentations and the 33rd European Academy of Dermatology and Venereology, also called EADV, which took place at the end of September. Talking about Cetaphil, the new gentle exfoliating line was introduced in the U.S., developed by dermatologists, the line provides gentle chemical exfoliation that is suitable for daily use even on the most sensitive skin. The launch campaign of this new Cetaphil line featured Gen-Z hit girl, Katie Fang amongst other skin influencers as well as renowned dermatologists. It was a digital first activation pushed also across different channels, including the in-store channel. In addition, the new and improved look of Cetaphil was first unveiled with dermatologists end of September leading into the first Cetaphil skin labs activation, which took place at the beginning of October, along fully debuted the reenergized branding, unlocking the signs behind our skin care and launching our new campaign called for everyone's sensitive skin. The global activation brought together in Los Angeles over 135 key voices, including dermatologist, key opinion leaders, renowned influencers across the world and, of course, also the press. This follows suit in our efficacy first strategy, which introduced the face of Cetaphil campaign earlier this year, which was just awarded the Glossy Pop award at the best ambassador program for 2024 with a very strong reach and engagement, including over 1 billion impressions already. I look forward to sharing more details on the impact of this activation during our full year results. Also, from an exceptional standpoint and execution standpoint, Cetaphil notably upgraded its positioning in Walmart in the U.S., further enabled by digital and by traditional activation. In-store, Cetaphil improved its shelving position in the faith category by moving up to the top 3 shelves from previously bottom 3 and by improving its assortment for HBL and aggregation for the hands and body lotion category, along with focused digital campaign across social channels, which included content, especially targeted also to reach younger audiences. The upgraded position is already translating into sales growth from Walmart and is a positive example of the focused execution and digital first strategy, which we have started to implement. Last but far from least, moving now to Therapeutic Dermatology. Before speaking about Nemluvio, let me also note that there are many highlights from the rest of the portfolio such as the differentiated label update for a cream with first markets having already an updated label reflecting the latest data on acne scarring or the continued growth momentum behind the Benzac power patches for acne across geographies. Switching to Nemluvio, there is a lot to share. Within 48 hours of the U.S. FDA approval of Nemluvio for the treatment of adults with prurigo nodularis in August of this year, the first treatment was administered to a patient, 48 hours. Acknowledging the life-changing impact of Nemluvio in patients and on their quality of life, our teams work hard to ensure that the product could rapidly be supplied and administered to patients. Since the launch, we have been overwhelmed by the positive feedback from patients and health care professionals and like who are astounded by the results, including patients experiencing relief on itch within the first days, if not sooner. While we received a lot of messages, I'd like to share an extract from a patient's e-mail to their doctor. The patient wrote, "Amazingly, the new medication is working. My skin hasn't been this clear. I can't tell you for how long. I didn't realize how much this inflammation was affected my daily life." After details on the improvements on their energy, their sleep, their itch, they closed their e-mail with, "My friends, family and coworkers can't even believe the difference in just a few days." Here's another quote by dermatologist practicing in the Chicago area, "The real world experience of Nemluvio has exceeded my expectation. Galderma was very well prepared with product in market. Access made possibly early on. It's valuable to have a new mechanism of action with the IL-31 receptor alpha, targeting to help my patients with continued significant unresolved itch, skin nodules and lesions." As you may also have noted from our press release regarding the EADV Congress, we also presented new clinical data demonstrating nemolizumab's long-term efficacy and long-term safety in atopic dermatitis and durability in prurigo nodularis. Nemluvio uptake among patients is progressing well with Nemluvio representing already over 25% market share of new patient starts, also called NRx as October 11 of this year following IQVIA data. Recall, this is a rare skin disease with an estimated 200,000 to 300,000 adult patient population in the U.S. The ramp-up is also strong amongst prescribers with already over 1,100 health care professionals describing Nemluvio in an underdiagnosed undertreated disease area. I'm proud of our sales force who have been very busy in the field with tens of thousands of sales costs and who have already reached more than 85% of the target prescribers in prurigo nodularis. As for reimbursement and provider discussions, they are progressing well as planned. We are successfully supporting prescribers with the exception request progress while progressing towards commercial coverage discussions. Galderma remains committed to its patient services, which are in place to help bridge to secure patients with treatment and support them through the process of getting coverage. The start to Nemluvio has been very positive and we're proud to be able to make a meaningful difference in the lives of patients we serve. And with that, I would like to hand over to Thomas to give you a bit more details on the financials.

Thank you, Flemming. I'm pleased to comment on our Q3 year-to-date trading performance and outlook for the full year. Let's start with our trading results. As mentioned earlier, we achieved record net sales of USD 3.259 billion in the first 9 months of the year, along with setting a sales record for the highest third quarter ever in the Derma's history. Year-on-year growth on a constant currency basis for the first 9 months was 9.2%. Reported growth was 8.3%, reflecting the impact of depreciating currencies especially the Argentinian peso, Brazilian real, Chinese yuan and Thai baht. When it comes to the composition of growth, it was primarily driven by healthy volume growth, along with a positive mix contribution. Growth was widespread across our product categories and was spearheaded by our larger region international. Let's look at the details on the next pages. Injectable Aesthetics, the largest of our 3 product categories performed strongly in the first 9 months of the year, achieving sales of USD 1.698 billion with year-on-year growth of 10.6% at constant currency, both Injectable Aesthetics subcategories achieved double-digit growth. Neuromodulators grew 10.4% year-on-year at constant currency, with fillers and biostimulators, net sales were up 10.9% year-on-year at constant currency. Growth for the product category was supported by strong performance in both international markets and the U.S. International, which is increasingly driving growth for Galderma as a whole, continued its double-digit growth trajectory in Injectable Aesthetics. Overall, in the first 9 months of the year, Galderma delivered strong performance in Injectable Aesthetics, outpacing the market and continuing to gain shares globally. Neuromodulators experienced particularly strong demand in Europe and Latin America. Fillers were impacted by continued market softness in some markets, while we continue to see markets with strong growth, such as China and Thailand. Biostimulators continued its strong broad-based growth trajectory, especially fueled by the successful Sculptra launch in Thailand earlier this year, increased penetration in the Middle East and broad-based strong demand across key markets. Now for Q3, third quarter stand-alone, neuromodulators growth was roughly flat and fillers and biostimulators had high growth, impacted by comparable base effect in 2023 and phasing into Q4 this year. Starting with neuromodulators. Year-on-year growth for the quarter discretely was impacted by a high base in 2023 with above 20% year-on-year growth in Q3 a year ago. In 2024, there is also a phasing impact between Q3 across our product categories and was spearheaded by our larger region international. Let's look at the details on the next pages. In 2024, there is also a phasing impact between Q3 and Q4. For Q3 2024 Galderma continued to gain share in both international markets and the U.S. As for fillers and biostimulators growth, there was some phasing impact with higher sales in Q3, which we expect to be partially offset in Q4, noting that fillers continue to be impacted by softness in some markets. Dermatological skin -- let me now turn to dermatological skincare, which recorded USD 990 million in net sales for the first 9 months with 10.6% year-on-year growth on a constant currency basis. We continue to outperform the market, driven by continued strong volume-based growth of Cetaphil in international markets and Alastin in the U.S. Cetaphil in the U.S. is successfully navigating a softer market environment based on stronger innovation, execution and sensitive skin engagement as presented earlier. Let me highlight that we continue to perform extremely well in the large and relatively lowly penetrated Indian and Chinese market as a result of focused and well-executed commercial strategies with emphasis on tailored local activation, expanding distribution and strong e-commerce. Next, turning to Therapeutic Dermatology. Net sales for the first 9 months of the year were $571 million, with year-on-year growth of 2.9% at constant currency. As Flemming noted, this is in line or slightly above our expectations, excluding the impact of Nemluvio. Growth was mainly driven by continued momentum in international markets, which offset the anticipated decline in the U.S. impacted by generic competition. With first sales recorded for Nemluvio for prurigo nodularis in the U.S., it sets Galderma on its trajectory to deliver strong growth in therapeutic dermatology as well as in the U.S. in the future. Now looking at net sales on a geographical level, growth is increasingly driven by Galderma's larger reporting geography international. International market net sales represented 59% of group net sales at the end of the 9-month period and remain with a long headway for further growth as the derma remains underpenetrated behind which we are focusing our investments. International markets maintained double-digit broad-based growth momentum fueled by strong performance in major markets with notably China continuing on its strong trajectory in both Injectable Aesthetics and dermatological skin care. Beyond China, we saw standout performance across key international markets such as Canada, India and Sri Lanka, Mexico, Thailand and the U.K. and Ireland. The U.S. grew single digits despite a softer market environment impacted by the continued softness in fillers and lower consumer consumption in the dermatological skin care market segment particularly for Cetaphil, while Alastin continued its strong growth trajectory. Now moving to the guidance for the full year. Based on the strong momentum in the first 9 months of the year and our confidence in the fourth quarter, I am pleased to confirm our full year guidance for net sales and core EBITDA. For net sales, as you recall, we raised our full year net sales guidance in H1 towards the upper end of the previously communicated growth range of 7% to 10% at constant currency. Today, we are confirming and narrowing the range by half again to 8.8% to 9.5% growth year-on-year at constant currency. This reflects the expectations laid out in H1 with a slightly lower year-on-year growth rate for H2 compared to H1 as well as within H1, a seasonal reacceleration into Q4 compared to the third quarter. As a reminder, following typical seasonal pattern, Q4 net sales in absolute dollars tend to be the highest sales quarter of the year for us. As for core EBITDA margin, we are confirming our full year guidance in line with 2023 core EBITDA margin at constant currency. This takes into consideration the planned ramp-up in Nemluvio spend and the continued improvement in our underlying profitability. Finally, I would like to reiterate that the additional modeling metrics for 2024, which we provided with our first half results in July remain unchanged following the inaugural bond issued by Galderma at the end of August. As a reminder, in terms of leverage specifically, we expect to be at the lower end of the previously communicated 2.25 to 2.5 turns range at year-end. This concludes the introductory remarks of Galderma's Q3 trading update. With that, and before we close the meeting with Flemming's final remarks, I would like to hand back to the operator to open the call for questions. And may I ask you all on the call, if possible, stick to 1 question at a time so that we can get everybody to ask their questions. Operator, can you please open the call for the first question.

[Operator Instructions] And your first question comes from James Gordon from JPMorgan.

James Gordon, JPMorgan. Two questions, please. The first one was Injectable Aesthetics. So you gave a medium-term guide before of low to mid-teens in local currency growth. I know growth was quite a long way below that this quarter. But it sounds like that's more of a phasing issue. But can you just remind us that medium-term guide, I assume that still stands. And what did that already factor in, in terms of any economic headwinds or consumer sensitivity and out-of-pocket costs. Was the cautious view on that already reflected in how are you now thinking about the medium-term guide there? That's the first question, please. And I've got a follow-up on Derma Skincare.

James, thanks for the question. And of course, our growth rate is year-to-date, 9 months stands pretty nicely at double digits. Our low to mid-teens CAGR where low to mid-teens is defined as numbers greater than 10% and lower than 20%. Yes, we are within that on a year-to-date basis. That's maybe the first takeaway. And then clearly, you are referring to the midterm guidance, which goes out until 2027. And clearly, within that period, we'll have more penetration to do, more countries to get into. And most notably, also, as you heard from Flemming's remarks, the launches of Relfydess, which are well underway in a number of countries. He mentioned Australia. There are 5 more European countries, which we got access to. So that ramp-up, of course, will happen during that time. You also heard, Flemming referred to -- I think I repeated it also that Sculptra, you could say, finally, we now got into China, which we are very excited about and then further filling of, so to speak, white spaces within our portfolio where we bring the #1 SKUs to large aesthetics geographies will be playing out throughout that year. So with that, we are in a good position, and we are not having any reasons to make any changes to midterm guidance at this point in time.

And the follow-up was just on Derma Skincare. So the 8% growth you reported this quarter looked a lot stronger than what L'Oreal reported on Tuesday night. But is that already getting a lot of benefit from some of the things you talked about, like shop upgrades and new launches within Derma Skincare or actually some of those factors still to have their effect and you'd actually see a benefit from there more in Q4, so you could actually grow even more strongly in Q4 than Q3? Or was the good performance today already benefiting a lot from those factors?

Well, thanks a lot, James, for your second question. The -- I think what you also saw in the reply from Thomas we grow very simply through 3 simple things: commercial execution, which means that we basically penetrate more in markets we're already in or we get into countries we're not in, that's one growth factor. Number two way we grow is we basically continue to drive innovation. And number 3 is we use our unique integrated model to cross-sell between aesthetics, dermatological care, Alastin. So those are the 3 ways we grow. And I think you're seeing the impact of it. We also have 1 unique thing is we are not bound by geographies. If a market has a top hurdle to grow, we shift resources. As I think I've mentioned many times, we allocated a beginning of the year of 70% to 80% of the variable spend that the countries have upfront. We still can claw back some. But the rest, you have to present a plan for how you're going to grow. So if the market like the U.S. doesn't have a good plan, I'm sure we can find China, we can find India, we can find others that can develop it. That's the way we grow. So the thing that we have introduced in the U.S. are just starting to show impact. We know the consumer sentiment in this particular category. I think you heard L'Oreal. I think you've seen activities around Kendo. What we do is we try to fix the fundamentals. We started off getting strong in e-commerce, then we realized that probably if we focused on Target and Walmart, we would be stronger. In Walmart, we realized also by talking to Walmart, that if we wanted to move up the shelf, it had to require innovation, it had to us, continue to be strong in space, but also supplementing HBL. And that's all what we're doing as we speak. And for a Walmart or for a target to improve your position in a given shelf, they want to see you drive activity. Well, Katie Fang had people waiting overnight to meet her. So that's the way you do activation. So all of these things have just started. I would say the U.S. is maybe less advanced, even though we continue to see share growth despite others having share losses, but we're just at the beginning of some of the things. I'm not going to project what the sale is going to be for the fourth quarter. But the initiatives in the U.S. have just started.

Your next question comes from the line of Richard Parkes from BNP Paribas.

I'll just stick to the one. So I just wondered if you could talk about the makeup of patients starting on Nemluvio between treatment naive and Jupix and failures. And I think the reason I'm asking, I'm just looking for any anecdotal feedback on responses in patients that have previously failed on Dupixent or not had full resolution in symptoms. I don't know whether the patient and physician experience you reported there reflected the patients prior Dupixent or not, but I'm just interested in that and how that's playing out.

Thanks a lot, Richard. So it's early days. I've been heavily involved in preparing the U.S. launch and also monitoring the launch. So remember, there are multiple things we've had to do. So first, we've, of course, focused on generating as many scripts as possible. And then the next focus has been to turn those scripts into page scripts, which involves a dual approach. It involves getting more and more commercial plans activated and to also activate CMS. Both of those activations are going according to plan, maybe even a bit accelerated on the government side. So that's the first activity we had. So the number we mentioned, 25% of NRx is, you can say, is the end result of that. Of course, we've also, on top of that, you can say, get share gains by having samples, but we really want to turn as many of the prescriptions into paid prescriptions as possible. We put services in place. We put other activities in place. So when a physician prescribes something that is as fast as possible and as frequently as possible leads to a prescription because time is also of the essence because some patients or some physicians don't want to wait a long time. So anecdotally, we haven't done the research. It looks like currently, we have like a 50-50 split between commercial and governmental. It also looks like initially, we were mainly getting patients that had failed or were not optimally treated with others. That is documented by EADV speeches and others. I remember one doctor from California said, I took all my 10 most challenging patients and put them on Nemluvio and then she clearly reported the results in some of it. It's all anecdotal at this stage. Recently, I've heard we also have become first line.

Your next question comes from the line of Jo Walton from UBS.

I'd like to continue on the same vein, if I could, please. So just to get an updated view of your size of the market. So of the 200,000 to 300,000 PN patients in the U.S., we were thinking that perhaps 75,000 of those would be biologically eligible. Given the number of prescribers that you have over 1,000, I'm surprised that there are that many doctors seeing PN patients who are severe enough to take a biologic. So presumably, you are accessing that a little bit more broadly. So an update there, please. And could you also tell us how -- where you are getting coverage -- payer coverage? Is there a step through? Do patients have to show that they fail something else? I mean that should be relatively easy to do presumably if they are severe patients, but just looking at the level of access because cynically, we could say that you're getting this high degree of uptake because you're offering so much of it for free. And as the final element of that, could you just tell us whether we would be able to see some sales in the fourth quarter, even if it is largely pipeline filling, but when you would expect to be able to report sales for us?

Yes, I can take your insights away immediately by saying that what we're reporting are not products that we've given away for free. We are talking about paid prescription. We're not going to comment on the size of our target audience, but we are telling you that over 1,100 physicians have been writing. The actual size of this market and the growth of this market given what I also experienced with Shire, these rare kind of conditions, once you have available treatments, you actually see more patients. So it's really an underserved, underdiagnosed category. What we are seeing and what we have seen is since Dupixent, which is also a great option came into the market, there's been a very rapid growth. I'm sure that goes, but it's really early to say it's probably going to accelerated by us. Physicians like choices, of course, in PN versus an AD, it may be that we have a profile that is particularly attractive given the relatively rapid itch release that people are -- the sleep impact and then the good clearance but it's really early days. But what we were referring to were paid prescriptions. We, of course, have many more patients on product based on free, but we are really trying to turn trials into actual prescriptions. The -- in most cases, in this category in the U.S., you are assumed to have been tried on a steroid. That would be the first thing. I'm sure as the plans are now developing what is first line, what is second line, you have to assume that most of these patients will have had to or will be on or will have been on a steroid treatment. It's anecdotal. We have not seen that they have stepped through Dupixent, if that's what we're referring to. But it's early days. And I think we are in contract negotiations. We are talking to the governmental payers through the CMS and we also have specialty pharmacies. Needless to say, I think likely had the product available in 48 hours, I think people are pretty impressed with how much progress we've made, but it's too early. And sales reports on Nemluvio, that's potentially a topic for next year.

Perfect. We will extend the time to make sure we get through the few questions that are in the waiting room. So we can just go through if you could keep it to one question, we'd appreciate it.

Your next question comes from the line of Emily Tedbury from Citi.