Ipsen S.A. (IPN) Earnings Call Transcript & Summary

Good morning, good afternoon, and good evening, everybody. I'm David Loew, the CEO of Ipsen, and it's my great pleasure to welcome you to this digital Capital Markets Day of Ipsen. Together with the executive leadership team, we are excited to share with you our new vision and strategy that we're going to lay out to you today. Next slide. Before we get started, I would like to just remind you of our safe harbor statement, which outlines the key risks and uncertainties. Next slide. The agenda of today looks as follows. I will start to outline the strategic outlook as well as our priority. And I will be followed by our CFO, Aymeric Le Chatelier, who is going to talk about the finances and also give you more details on the guidance. He will be followed by Howard Mayer, our Head of R&D, who will walk you through our R&D strategy. We're going to then take a 10-minute break. And the next session is going to be given by Bartek Bednarz, our Head of Global Product Strategy. We're going to have ample time at the end for conclusion and question and answers. Next slide, please. Let me begin with the strategic outlook. Next slide. Our vision informs everything that we're going to discuss today. It is crystal clear. We aim to be a leading global midsize biopharmaceutical company with a focus on transformative medicines in oncology, rare disease and neuroscience. Next slide. How are we going to achieve this? We're building on solid foundations. On the one hand side, we have a very robust specialty care portfolio with leading market shares. Somatuline as an example has a #1 position in most of the markets around the world. As well as Decapeptyl, this port is very well established in a second position. We're also having growing contribution of innovative assets like Cabometyx and Onivyde. We have recently seen the impressive data of 9 ER in first-line renal cell carcinoma. And we have established ourselves in a solid second line position of the post gemcitabine in pancreatic cancer. We have a strong global presence with highly engaged employees. 1/3 of our sales is coming from the United States, 1/3 is from the key European markets, and 1/3 from the rest of the world. And I have to say, I was particularly proud during these difficult times of COVID-19 that our employees were so engaged making sure we have no disruption in our supply. We're also building on strong in-house development capabilities to leverage new assets that we are bringing in or to also fully develop in life cycle management the drugs we currently have. Next slide. We have to acknowledge though that we're also facing some challenges. We have, of course, as you well know, the potential entry of lanreotide generics. The timing is not entirely clear, but we know they will eventually come. We have a somewhat above-average cost structure when we compare with our peers in pharma, something that we will have to address. And we have a somewhat unbalanced R&D pipeline. We have several drugs now in registration phase with new indications mainly. We have a solid Phase III pipeline, but we have to do more in the Phase II, Phase I and preclinical space. And that will have to be supported by an external innovation strategy, which is really focused on execution in terms of bringing in the right quality, but also the right quantity. Next slide. Let me outline where we will focus. Following a rigorous review and tough questions that we asked ourselves on each business, we came to the conclusion to define the 3 areas you see outlined here as core drivers: oncology, rare disease and neuroscience. Consumer health care, we consider non-core. Let me start with oncology. In oncology, we have a very strong position worldwide, and we intend to build on to this. The market is growing very strongly. We see a clear scientific S-curve with more innovation happening in that space, and there is still very high unmet medical needs. In rare disease, we have a relatively small platform currently with acromegaly. We're going to potentially add to this the launch of palovarotene in FOP. And we are for sure going to make more efforts in this highly attractive area, which we think is an ideal space for a midsize company. And then third, we are going to focus on neuroscience, where we want to excel with this work that we have on the market today. We're also bringing a liquid version. And then we bring the long-acting compounds that are in preclinical now, which are going to accelerate. They're going to enter in Phase 2 at the beginning of next year, and we are particularly excited about that. I mentioned consumer healthcare as non-core. We are proceeding with the strategic review and are making good progress. Next slide. Let me outline now our strategic priorities in more detail. We can have an overarching theme of "Focus. Together. For patients and society." And we have defined 4 pillars. One, we want to bring the full potential of our innovative medicines to patients. Two, we want to build a high-value, sustainable pipeline. Three, we clearly need to deliver efficiencies to enable targeted investments and growth into for example R&D external innovation pipeline or accelerating the drugs, as I mentioned, but also in terms of having enough resources to have the launch like palovarotene. Now no strategy is perfect without having the right employees with the right skills and especially the right culture. So we want to focus on boosting the culture of collaboration and excellence, really achieving best practice that we are seeing in the pharma industry. Next slide. So let me start now with the first pillar of bringing the full potential of our innovative medicines to patients. Next slide. To achieve this, we have prioritized a number of key activities. We want to maximize the value of our core products. Somatuline has a differentiated label, but we have also launched the differentiated device. And we're going to continue to promote the drug until the appearance of generics. With Decapeptyl, we are going to focus on the 6 months formulation as it ideally fits the health care system, allowing patients to come less frequently to the physicians and having less injections. On this board, we are going to launch the liquid formulation next year in aesthetics. And we are collaborating with Galderma to also bring in new indications like glabellar lines to China, for example. In the treatment space, we see still a lot of potential in for example the treatment of spasticity because you need to remember that there are about 80% of patients which are eligible for neurotoxin treatment, which are currently not being treated. So there is a question how can we optimize that. We want to also capture the full potential of innovative oncology portfolio. Cabometyx, you have seen the 9ER results from ESMO. We're going to add more indications to that drug. And on Onivyde, the same thing. We have a good established post-gemcitabine position in pancreatic cancer, but we're also going to add additional indications. And you have seen, for example, yesterday our announcement that the small cell lung cancer indication has received the fast track status by the FDA. Third, we want to successfully execute on the palovarotene launch, assuming of course that we're going to get the registration. And we are going to expand our geographical presence. We are currently not present for example in Japan. And we want to also expand in other markets around the world, for example, in the Middle East area. And then we want to deliver transformative medicines to patients based on the excellence in execution. I think Ipsen still has the potential to increase its practices in terms of best practice that we're seeing with competitors. And I'm sure we are going to make progress in the coming years on this. Next slide, expanding now on our pipeline. We have a significant potential in our late-stage pipeline. Let me walk you through those. With Cabometyx, we have basically a pipeline and a product. I talked about the submission of first-line renal cell carcinoma with nivulomab. We're also going to see the unblinding of the first-line hepatocellular carcinoma and the submission in case positive with atezolizumab as well as the additional indication we're excited about in second-line non-small cell lung cancer, also with atezolizumab, and also in second-line metastatic castrate-resistant prostate cancer. With this, we are giving a revised potential peak sales guidance, risk-adjusted, of about EUR 700 million. With Onivyde, we want to establish Onivyde as a standard of care in hard-to-treat cancers. I talked about the second-line small cell lung cancer that we are going to file in 2022, and on our first-line PDAC indication, which we're going to file in 2023. Our new potential peak sales risk-adjusted are guided above EUR 300 million. And then we have palovarotene. So here, we think we have a good chance to establish the leadership in FOP. We're going to file in chronic and episodic, and Howard is going to talk to you more about that. Clearly, the PDLs are going to depend on the potential level of the FOP that we're going to get from FDA. Next slide. Talking about the late-stage pipeline moves me now to the second pillar of building a high-value, sustainable pipeline. And here, we really have made a number of fundamental changes in our approach and level of commitment for the external pipeline. Next slide. We want to accelerate the external innovation and strengthen our pipeline. More detail in oncology. We are going to focus on solid cancers, but also now, newly for the first time, are adding hematological tumors. The reason we do this is that we believe that there is still a high unmet medical need, and there are clear synergy between the 2 of them. In order to be successful on our external innovation strategy, we think we need to really position us on the right indications. And here, we're got to focus on niche tumors. Or if we go into broader tumors, they need to have clearly a biomarker, and I'm talking of more rare biomarkers, which do not exceed the 5% threshold. Because as soon as we are above this, we are rather in the kind of larger pharmaceutical territory, and we want to be sure that we are positioning ourselves in the right spot. We are also going to maximize the life cycle management potential that our current drugs have and future drugs. On rare disease, we are going to go newly beyond endocrinology and bone disease. As you know, there are about 7,000 different diseases in a rare disease. Of course, we have already started screening them, and we have identified priorities. For confidentiality reason, we are not giving the details of it because these are often small spaces. In terms of platforms, we are going to go with established platforms, but also some innovative technologies including some gene-based modalities. In neuroscience, we're going to focus on our in-house recombinant long-acting toxins. Having seen the preclinical data has made us really excited about them because we think they can have a much longer duration of action, which is highly competitive. And that can fundamentally change the mechanics in the market, be it in aesthetics or in, for example, the treatment of spasticity. We're also going to try to accelerate our TSIs because the treatment of pain is still a high unmet medical need and a problem in the health care segment. And then on external innovation, we're going to focus on rare neurological disorders. Our goal is to focus on assets across all stages of development and with a strengthened organization to make sure that we can execute well on external innovation with the right quantity and the right quality. We have communicated that we have a EUR 3 billion cumulative firepower for our pipeline expansion by 2024. Next slide, now integrating the various elements I have just walked you through, you can see on this graph, which is illustrative, the kind of short, mid- and longer term and a message that we are clearly remaining committed to growth. In the shorter term, we will have to work through the transition of potential generics entries. But we are confident that thanks to the growth of our core brands and our innovative brands, we are in fact going to be able to continue having growth. On top of that, we're going to add external innovation opportunities. Aymeric will provide you more detailed guidance on this. Next slide. Focusing now on our third pillar, delivering efficiencies to enable targeted investments and growth. Next slide. We need that to execute on our strategy. So we have to become more efficient, we have to become more focused and agile to be able to fuel the growth that we want to have. And so when we look at now the generation of efficiencies, we have 3 pillars. We have a smart spending initiative where we need to leverage still more our purchasing department. We have 15,000 suppliers as an example, that's far too much, but also on focusing on really what moves the needle. So we have a very passionate culture, and we need to become a bit more disciplined on where we invest. We're also going to identify manufacturing efficiencies, and we are on a good path regarding that. And we are going to make a strong push on the digital enablement, be it, for example, in manufacturing with digital 4.0, or with artificial intelligence in our clinical development, or for example in our go-to-market strategy. This is going to be supported by a focused and agile operating model where we're going to simplify our operations, and we are going to increase the excellence in execution. Howard is also leading the organization through a transformation. Next slide. To deliver on our strategy and really be successful, we have to have the right employees with the right capabilities, but we also need to have the right culture. So we want to boost the culture of collaboration and excellence. Next slide. So to drive value, we want to improve the capabilities in our culture impacting on patients' lives and society. And we have 4 pillars to that I would like to lay out to you. The first pillar is we want to enhance our patient centricity. We have a clear mission. We have a clear empathy with patients, but we are lacking a truly insights-driven mindset where we fully understand what is happening to patients in terms of the diagnosis, where do they go through the health care system, when do they get treated, what treatments do they get? And also developing a mindset challenging the status quo. I talked to you about spasticity treatment. Having 80% of patients not receiving a neurotoxin is certainly not acceptable. The second one is we want to attract and develop, retain highly engaged talents. What we're going to do is we're going to ferment more cross-functional development opportunities, for example, from affiliates to headquarters and vice versa, but also from medical to R&D and vice versa. These are just examples of what we are going to start. And then third, we want to nurture a culture of focus. I told you we are very passionate, but we are sometimes doing too many things. And we also want to be really high performance-oriented. One way to foster that is to increase the accountability to make sure that we have faster and better decision making. And we have recently in September launched the core asset team model where we have kind of a CEO for a brand on a worldwide level going from the very early development until to the expiration of the patent. And fourth, we want to strengthen our core capabilities and foster collaboration. And we want to do that by expanding the expertise and attracting also the right expertise as well as leveraging collective intelligence. We are doing for example such an exercise now in the medical affairs department, where we can still gain in terms of best practices. Next slide. I'm passionate about corporate sustainability. And in Ipsen, we have very clear goals and metrics that we have laid out up to 2024. Uniquely, you can see on the right that we have included that into the compensation of the management as well as in our definition of the credit facility. So let me walk you through the different pillars. The first pillar is focusing on employees, where we want to have more than 3/4 of the countries being certified as a best place to work. We also want to achieve a gender balance in our global leadership team and really having diversity and be inclusive. It makes us better in our decisions. And we can tap into a larger number of people to find outstanding leaders. And we want to promote 2/3 of our promotions from within. We have been attracting a bit too many people from outside, and we have the potential to create more promotions from within. The second one is relating to communities. We want to make sure that our employees are strongly connected with their communities, either in the health care segment or in the environment. So we have given ourselves a goal of having at least 1/3 of employees being really active in space, and I think we're even going to exceed that. We will continue also to support the Access Accelerated initiative with the International Federation of Pharmaceutical Manufacturers Association. And we're going to focus on environment. I am convinced that as a company, we have to focus on this. Because if not, as a society we're not going to achieve our goals. And here, we set ourselves some very tangible goals. We want to have a reduction by 21% of the greenhouse gas emissions by 2024. We want to reduce by 1/4 the water consumption as well as processed waste. Next slide. So in closing my presentation, I just want to like to sum it up. You heard our theme, "Focus. Together. For patients and society." So we want to be a very successful midsize, globally acting pharmaceutical biotechnology company with a leadership in life-threatening diseases and underserved diseases with truly transformative differentiated medicines. We want to have a sustainable pipeline with ambitious and disciplined external innovation strategy. And we are going to support this by a focused and agile organization and leveraging best-in-class practices. And we want to have a great place for talents, which are truly committed to patients and society. I'm very optimistic about the future of Ipsen. I think we have many strengths that we can leverage. And I'm delighted now to invite Aymeric Le Chatelier to provide you the financial section.

Thank you, David. I'm Aymeric Le Chatelier, Ipsen Chief Financial Officer. And it is my great pleasure today to present a financial update including the detail of our midterm outlook and our initiative to achieve operating efficiency to invest further in our pipeline. Next slide. Let's start with a high-level look at our solid financial profile at Ipsen. As you know, we now generate over EUR 2.5 billion in group net sales. And this is really driven by our growing specialty care portfolio, which represent the vast majority of our net sales, while our consumer health care business now accounts for less than 10% of our sales. Our core operating margin, greater than 30%, is now in the range of our specialty care peers. And we have been able to leverage our global commercial infrastructure. Finally, we have a healthy level of free cash flow, greater than EUR 450 million in 2019. This is really reflecting our high level of EBITDA and conversion of profitability into cash, also combined with the disciplined management of working capital and capital expenditures. Next slide. Regarding our performance year-to-date in 2020, we have delivered good results despite the impact of the COVID-19 pandemic during this exceptional year. Starting with the top line, we have achieved resilient sales growth, driven by our oncology portfolio of differentiated treatments for critical conditions. We've been able to deliver this growth despite the negative impact of the pandemic on our neuroscience and consumer health care businesses. On the bottom line, we've been able to generate a solid core operating margin as a result of SG&A savings from COVID-19, resulting mainly from the switch to digital sales retailing, reduced travel expenses and the conversion to virtual conference and medical meetings. In terms of impact on our key activities, we have seen very little disruption from the pandemic on our manufacturing site and supply chain as well as for our clinical trials. Finally, we have maintained a very strong balance sheet with a net debt lower than EUR 1 billion at the end of June 2020 and below 1x EBITDA. As a result of this performance for the first 9 months, we remain confident in our ability to deliver our 2020 guidance of group net sales growth greater than 2% at constant exchange rate, and core operating margin above 30% of net sales. Next slide. Now turning to our financial outlook. I first wanted to confirm that Ipsen is on track to deliver its previous 2022 financial targets, but is now committing to a new 2024 financial outlook. As you can see on the top line, we expect compounded annual growth rate in group net sales of between plus 2% and plus 5%. This guidance is set at constant exchange rate and constant scope and is assuming a risk-adjusted contribution from potential additional indication, mainly from Cabometyx and Onivyde. Regarding the OpEx line, we are committed to invest in R&D supported by SG&A efficiency. Specifically, we expect to lower our SG&A as a percentage of net sales over the period 2024, driven by focusing and optimizing our cost structure. I will discuss that more in detail just after. For R&D, we expect the percentage of net sales over the period to increase based on the execution of our external innovation strategy. Finally, in terms of firepower to fuel business development, we expect, as indicated by David, to generate a cumulative EUR 3 billion for pipeline expansion by 2024, excluding the sale of any asset and based on our net debt remaining below 2x EBITDA. So next slide, let's turn now to the specialty care driver of our expected robust midterm sales growth. First, Cabometyx will clearly be the key growth engine of the group, and we expect to deliver a strong growth over the period to 2024. This will be based on the expected approval of the first-line RCC in 2021 and on potential additional indication in the following years. As David mentioned before, we now expect the risk-adjusted Cabometyx peak sales to exceed EUR 700 million, but to be clear, we do not expect to reach the peak sales by 2024, but beyond that horizon. For Onivyde, we expect only limited growth in the current level in second-line metastatic pancratic cancer until we receive potential approval in the second-line small cell lung cancer and first-line metastatic pancreatic cancer indication. Assuming these 2 indications do come through, we now expect risk-adjusted Onivyde peak sales greater than EUR 300 million, and this is going to be also beyond 2024, given the timeline for approval of those additional indications. Howard and Bartek will provide more detail on both Cabometyx and Onivyde later today. For Somatuline, as you know, the outlook is highly dependent on the timing of potential additional generic, especially lanreotide generics. Until this occurs, we expect to achieve attractive growth and market share gain based on our superior and differentiated product profile. Overall, our guidance assumes that Somatuline will face a net sales decline to 2024 as a result of generic competition. For Decapeptyl, we expect continued growth in the expanding prostate cancer market despite a challenging Chinese environment. For Dysport, we expect outside of COVID-19, a solid growth over the period, in line with the attractive neurotoxin market dynamics in both aesthetic and therapeutic indication. And finally as David said, for palovarotene, we now assume a sales contribution, which will of course highly depend on the scope of the label, assuming regulatory approval. Next slide. I would like now to discuss the evolution of our expense line more in detail. As I mentioned, we are committed to invest in R&D, supported by SG&A efficiency, and we want to do that by focusing and optimizing our resources. We have many projects and initiatives underway, which you can see on that slide. This covers smart spending initiatives, whereby we will focus only on our highest-priority project. We will drive also further procurement savings across the entire organization, and we will adapt our internal and external spending to be much more agile and efficient. We will also simplify our business through optimizing our processes, adjusting our footprint whenever it's appropriate and adopting new ways of working. Our objective is also to build on COVID-19 savings to retain and leverage as much as possible 2020 cost reduction in travel, marketing and medical expenses over the period. As a consequence of these initiatives, we are confident that we'll reduce the ratio of SG&A to net sales over the midterm horizons to be much more in line with our specialty care peers. We also aim on another side to improve our cost of goods sold in order to limit the negative impact of product mix as and when we will face generic competition to Somatuline. To deliver this, we have a number of manufacturing initiatives, including bringing the production of Onivyde in-house and a range of productivity and process enhancements. And finally, we expect also to derive significant benefits from leveraging our digital transformation, including manufacturing 4.0, artificial intelligence in clinical trials, and also a more innovative digital go-to-market model. Next slide. The efficiencies that I just highlight will help us to invest more in R&D to drive our long-term growth and sustainability. To deliver on this, we have begun the process of transforming our R&D organization. We have imposed a new level of prioritization on our internal development program. We are and we will discontinue or partner the program with lower potential and only accelerate those which will bring real benefit to patients. Howard will discuss the details of this a little bit later. Most importantly, we have an increased commitment to invest in external innovation. Together with the new framework for assessing the opportunity across our 3 core specialty care therapeutic area, from early to late-stage transaction. We will then be fully positioned to leverage the excellence of our internal development organization. So we clearly intend to execute on our external innovation strategy, which will lead to a higher level of R&D to net sales. However, and to be very clear, our intention is to manage the entire OpEx envelope while increasing our R&D investments. Next slide. Turning now to capital allocation. External innovation and business development are clearly our #1 priority, as David said. Over the period 2024, we will generate cumulative firepower of around EUR 3 billion to support our ambition, including EUR 1 billion capacity already available end of 2020. This level is assuming that we maintain a conservative net debt leverage below 2x EBITDA. You should also note that we expect to increase our cash flow generation over the period through higher EBITDA conversion, improved working capital management and maintaining a slightly lower level of CapEx. Our other capital allocation priorities will be our dividends, but you should not expect any significant evolution. Similarly, we will continue to conduct anti-dilutive share buyback to cover management incentive plan only. And finally, you should know that we have limited milestone payments due over the period to 2024, except maybe some milestones that we may have to pay associated with potential indication expansion for Onivyde. Next slide. As we execute on our external innovation strategy, we will ensure that every transaction meets strict value creation criteria. In terms of scope, we will first consider the spectrum of transaction from small to midsize, from early-stage to bolt-on deals, from licensing and collaboration to full acquisition of assets or company. We will then apply a rigorous framework for every transaction we assess. Within this, we will consider internal rate of return versus our cost of capital; the strategic value of any transaction; our expected synergies; and very importantly, how we can mitigate the risk through a careful deal structuring. We are confident that we can execute on our external innovation strategy as we are constantly evaluating a range of targeted assets. Lastly, we have also a significant financing capacity to support our external innovation strategy. We already have in place more than EUR 2 billion of long-term financing, including a EUR 1.5 billion revolving credit facility, which is fully available for transaction. And together with our strong cash flow generation, these position Ipsen very well to capture any attractive external innovation and business development opportunity that will meet our strict financial criteria. With that, thank you for your time, and I will move now to the R&D session with Howard Mayer.

Thank you, Aymeric. It is my pleasure to now provide you with an overview of executing the R&D strategy at Ipsen. Next slide. I joined Ipsen exactly 1 year ago today, and I saw that there was a real opportunity to improve R&D across several dimensions. Since that time, we've undergone a significant transformation in R&D. And this includes creating therapeutic area units, or TAUs, with aligned functional support. Focused TAUs have asset leaders, as David mentioned, and medical directors supported by matrix-based dedicated teams from the key functions. Three TAUs include oncology, rare disease and neuroscience. Clinical operations is now centralized at my leadership level to ensure operational excellence in executing clinical trials. We have also strengthened R&D operations to drive not only program management and analytics as well as coordinate R&D's input into due diligence on external opportunities and manage their integration. We have a New Portfolio Committee that's co-chaired by myself and Bartek Bednarz for major portfolio decisions such as stage-gate decisions on internal pipeline and in-line programs. There is therefore alignment of these decisions with the overall R&D and portfolio strategy and prioritization of the entire portfolio including decisions on external assets being considered. I've appointed 6 of 11 new leaders on my R&D leadership team with significant industry experience. We've also strengthened our links to key opinion leaders in all disciplines with the recent strategic refresh. And with respect to external innovation, we have moved the sourcing group into R&D to bring them closer to our scientists while still working closely with business development and are expanding the team both in numbers and geographical footprint. Next slide, please. You've heard from David and Aymeric about the importance of external innovation and how we are refining our approach. Let me now expand on that from an R&D standpoint. First, to better understand the oncology landscape and probability of phased transition and regulatory approval for oncology assets, we formed a collaboration with MIT. And not surprisingly, we discovered that the use of patient selection biomarkers has dramatically increased over the past decades and is associated with an increasingly greater number of regulatory approvals. Over the last 2 decades, the number of nontargeted therapies has steadily declined, and the use of targeted agents has increased even over the last 5 years. Since 2016, 85% of drug approvals in oncology have been with targeted agents. And about 40% involve patient selection biomarkers, either genetic or protein expression biomarkers. So while we will prioritize best-in-class assets, which are clinically validated and have meaningful differentiation, we will also consider first-in-class assets associated with a strong biomarker hypothesis or validated antigen targets, also ideally displaying early evidence of efficacy. In oncology from an indication perspective, especially considering potential late-stage opportunities, our intent is to focus our proactive searching on niche or rare tumor types with a strong disease hypothesis in solid and hematologic malignancies. We also aim to explore emerging biomarker or unmet need segments across larger tumor types. And we will also consider life cycle management potential in all of these areas. In addition to conventional modalities such as small molecules and monoclonal antibodies, we will also consider emerging modalities such as antibody drug conjugated and protein degraders. In rare disease, as David mentioned, we plan to expand our disease area approach beyond our core rare disease therapeutic areas of endocrinology and bone disease and to also pursue conventional modalities with an aim to monitor and potentially explore gene therapy if assets or platforms align with our disease area strategy. Next slide, please. This shows our advancing pipeline with a significant number of late-stage registrational trials, which I will describe during this presentation. Under my leadership, we conducted a comprehensive portfolio prioritization exercise earlier this year and made decisions, some of which have been previously announced, to deprioritize certain development programs as shown on the far right. Some of these decisions were made for strategic considerations as in the case of toxin E fast-acting neurotoxin or for efficacy reasons as, for example, in the case of Dysport life cycle management in hallux valgus. We also have made the strategic decision to externalize the systemic radiation therapy programs, satoreotide for neuroendocrine tumors and IPN01087 for pancreatic cancer. On extensive review of these programs, we believe that while these have potential value for patients, they would be best developed by another company more fully dedicated to the radiopharmaceuticals area, which requires significant investment. These decisions allow Ipsen to focus only on the highest-value potential opportunities in our pipeline in our core areas of oncology, rare disease and neuroscience. And we will build on this through our external innovation strategy, as has been highlighted. Next slide. You've heard David discuss how excited we are about Cabometyx in first-line renal cell carcinoma. My next few slides will review the CheckMate-9ER data, which was an oral presentation at a Presidential Symposium at ESMO in September and one of the highlights of the conference. Cabometyx or cabozantinib, a tyrosine kinase inhibitor approved in first-line and second-line renal cell carcinoma and in second-line hepatocellular carcinoma, is being studied in combination with immune checkpoint inhibitors. CheckMate-9ER is a Phase III randomized study of cabozantinib plus nivolumab versus sunitinib in patients with untreated advanced or metastatic renal cell carcinoma and no prior systemic therapy. 651 patients were randomized in a 1:1 ratio to cabo/nivo or sunitinib and treated until we cease to find progression or unacceptable toxicity. Patients were stratified at the time of randomization by IMDC prognostic score, PD-L1 expression and geographic region. The median follow-up was 18.1 months. Next slide. Median progression-free survival was the primary efficacy endpoint. As can be seen in the upper graph, the hazard ratio was 0.51 with a p-value of less than 0.0001. Median progression-free survival doubled on the combination, providing an additional 8.3-month benefit and a 49% reduction in the risk of progression or death. The sunitinib progression-free survival was consistent with other studies with this IMDC risk distribution, which was a relatively higher-risk population with a distribution of 23% favorable, 57% intermediate risk and 20% poor risk groups. Progression-free survival was also consistent across both IMDC and PD-L1 subgroups. And as can be seen in the lower graph, overall survival also met statistical significance with a hazard ratio of 0.6 and a p-value of 0.001. Compared with sunitinib, cabozantinib plus nivolumab resulted in a 40% reduction in the risk of death. Overall survival was also consistent across all IMDC and PD-L1 subgroups. Next slide. Objective response rate also achieved significance versus sunitinib. It was a greater than twofold improvement in the percentage of patients responding to treatment for an objective response rate in the cabo/nivo arm of 55.7% versus 27.1% in the comparator arm, with a p-value of less than 0.0001. In addition, a higher proportion of patients in the cabo/nivo arm achieved a complete response of 8% as compared with 4.6% in the sunitinib arm. The median time to response was 50% longer for patients receiving sunitinib versus patients receiving cabo/nivo. And median duration of response was also longer for cabo/nivo and for sunitinib. Cabo/nivo was well tolerated with a manageable adverse event profile and with a significantly improved quality of life as compared with patients receiving sunitinib. So in summary, the combination of cabozantinib plus nivolumab in first-line renal cell carcinoma showed superior overall survival and doubled median progression-free survival and objective response rate with a favorable safety profile and an improved quality of life compared with sunitinib. Next slide. Another Phase III combination study with cabozantinib is COSMIC-312, which is a randomized study in previously untreated patients with a hepatocellular carcinoma randomized 2:1:1 to either cabozantinib in combination with atezolizumab or sorafenib or an exploratory arm of cabozantinib alone at a higher dose. Co-primary endpoints are progression-free survival by blinded independent review and overall survival. This study has completed enrollment, and top line results are expected during the first half of next year. EU filing is expected later in 2021 assuming positive results. The study is continuing to enroll in China. Next slide. Cabozantinib is also being evaluated in combination with atezolizumab in a number of solid tumors in the COSMIC-021 Phase Ib basket study. As shown on the left, in non-small cell lung cancer cohort 7 of the COSMIC-021 study, 67% of the patients had a decrease in tumor size, and there were 8 partial responders post the checkpoint inhibitor therapy for an objective response rate of 27% and a disease control rate of 83%. As shown on the right, in metastatic castration-resistant prostate cancer cohort 6 of the COSMIC-021 study, 76% of the patients had a decrease in tumor size. And there were 11 partial responders and 3 complete responders for an objective response rate of 32% and a disease control rate of 80%. Next slide. Based on these very promising signals, we have opted into 2 Phase III studies with Exelixis and Roche. CONTACT-01 is a global Phase III pivotal trial of cabozantinib in combination with atezolizumab in patients with metastatic non-small cell lung cancer who have been previously treated with an immune checkpoint inhibitor and platinum-containing chemotherapy administered concurrently or sequentially with evidence of radiographic progression. This is an ongoing study with patients randomized 1:1 to receive cabozantinib plus atezolizumab versus docetaxel. The primary end point is overall survival. CONTACT-02 is a global Phase III pivotal trial of cabozantinib plus atezolizumab in patients with metastatic castration-resistant prostate cancer who have been previously treated with one novel hormonal therapy. This is also an ongoing study with patients randomized 1:1 to receive cabozantinib plus atezolizumab versus a second novel hormonal therapy, either abiraterone and prednisone or enzalutamide. The co-primary endpoints of the trial are progression-free survival and overall survival. And these studies are expected to read out in 2022 and 2023, respectively. Next slide. Now moving on to Onivyde, which is a nanoliposomal formulation of irinotecan with an enhanced chemotherapeutic payload at the tumor site. A Phase II study of Onivyde in combination with oxaliplatin 5-FU and leucovorin in first-line pancreatic adenocarcinoma with 12-month observational data was a late-breaker oral presentation at ESMO GI in July 2020. And it showed an objective response rate of 34.4%, a median progression-free survival of 9.2 months and a median overall survival of 12.6 months. Durable response was also observed with a median duration of response of 9.4 months. No high-grade fatigue, sensory neuropathy or thrombocytopenia were observed. In June of this year, Ipsen was granted Fast Track designation from the FDA to facilitate the development and potentially expedite the review of Onivyde in first-line pancreatic adenocarcinoma. This strongly supports the ongoing Phase III study comparing Onivyde in combination with oxaliplatin 5-FU and leucovorin, the nal-IRI plus regimen with gemcitabine/abraxane in the first-line pancreatic cancer setting. This study is ongoing with an expected readout in early 2023. Next slide. In the Phase II study of second-line small cell lung cancer with Onivyde, 74% of evaluable patients had tumor shrinkage with an objective response rate of 44% including 11 of 25 partial responses, one of which converted to a complete response shown in the CAT scan in the left upper portion of the slide. This is more than double the objective response rate compared to historical data of topotecan. Expected GI toxicity was observed with a much lower rate of myelosuppression observed than with historical rates of topotecan. A 1:1 randomized Phase III study versus topotecan is ongoing with expected top line readout in 2022. Interim analysis is expected in the first quarter of next year, which could form the basis for an accelerated regulatory review based on recent discussions with the FDA, which, assuming positive results, could then lead to an earlier U.S. submission in the second half of next year. And as David mentioned, we just heard yesterday that FDA has granted us Fast Track designation for Onivyde for the treatment of patients with small cell lung cancer who have progressed on or after platinum-based first-line therapy. Next slide. We formed collaborations with 2 potential best-in-class preclinical assets targeting the MAPK pathway this past year: IRICoR in May and AGV in September. The MAPK pathway is one of the most commonly mutated oncogenic driver pathways and cancers with high unmet medical need. However, there is room for improvement as existing approaches provide insufficient pathway in addition against the subset of mutations. IRICoR's next-generation RAF inhibitors have a compelling mode of action, potentially enabling the treatment of RAF mutant-driven cancers without the deleterious paradoxical activation of the MAPK pathway, thus addressing key limitations of RAF inhibitors currently approved or in development. This program is currently at lead optimization stage, and advancement to development candidate selection is expected next year. ERK is an emerging oncology target with promising early clinical activity in tumors driven by aberrant activation of the MAPK pathway. Single-agent activity is anticipated with AGV's ERK inhibitor in niche tumors with high unmet medical need, offering a potential for early clinical proof of concept. Additionally, there is strong scientific rationale for combining these agents with synergy between ERK and RAF inhibitors to treat a broader range of tumor types in Ipsen's core indications such as pancreatic cancer and non-small cell lung cancer. The ERK inhibitor program is also currently at lead optimization stage, and both opportunities fit Ipsen's oncology strategy for early assets with potentially best-in-class value propositions for a clinically validated pathway within Ipsen's core solid tumor indications. Assuming successful advancement, we anticipate these entering the clinic in the 2022, 2023 time frame. Next slide. Now moving on to rare disease. FOP or fibrodysplasia ossificans progressiva is a rare and disabling congenital disease. Individuals with FOP appear normal at birth except for the characteristic malformations of the great toes seen in the right upper photograph, which are present in all classically affected individuals. Minor traumas such as intramuscular immunizations, mandibular blocks for dental work, blunt muscle trauma or influenza-like illnesses can trigger painful new flare-ups of FOP, leading to progressive heterotopic ossification or new bone formation. This is a progressive disease from early in life. Bone formation in FOP is episodic. But as you can see in the illustration in the lower right, disability is cumulative over time. The disease is almost always caused by an R206H gain of function mutation in activin receptor 1 also known as ALK2. There are no approved therapies for this disease. Steroids and nonsteroidals are used for symptomatic relief. Most patients with FOP are confined to a wheelchair by the second or third decade of life and require lifelong assistance in performing activities of daily living. The median age of survival is 56, and death often results from complications of Thoracic Insufficiency Syndrome. Next slide, please. In September, updated data from the Phase III MOVE trial were presented at ASBMR, the American Society for Bone and Mineral Research. The conclusions from the oral presentation were that demographics and baseline characteristics were similar between palovarotene-treated patients in the Phase III MOVE trial and untreated patients in the natural history study to support comparing the 2 populations. Also that new HO volume can be used as a study end point to assess FOP disease progression. And although prespecified futility criteria were met, post hoc analyses using the same population showed substantial efficacy of palovarotene in FOP at the third interim analysis, similar to what was observed at the second interim analysis. And as can be seen from the figure on the right, there was a 62% reduction in mean annualized new HO volume in the Phase III study for a nominally significant p-value. And also at the third interim analysis, the prespecified primary statistical end point using nonsquare root transform volumes demonstrated a meaningful reduction in HO volume, also replicating what was seen at the second interim analysis. And based on these encouraging data, our global regulatory submission plan is progressing. Both FDA and EMA agree that these data support a filing and review of a marketing application for palovarotene. The most common adverse events were retinoid class effects. And it should be noted that premature physeal closure was observed in a percentage of children with open growth plates. And as an important adverse event, the age of the target population will be a review issue for the regulatory agencies during the review of this application. Next slide. IPN60130, formerly known as BLU-782, is an orally bioavailable, highly potent and selective ALK2 kinase inhibitor targeting the mutant ALK2 FOP receptor. Unlike palovarotene, which is a selective retinoid acid receptor gamma agonist and prevents downstream Smad signaling, IPN60130 targets the causative ALK2 receptor in FOP and has a different mechanism of action that may be complementary to palovarotene. It displays low nanomolar affinity and is more potent against mutant ALK2 than against wild-type ALK2, and it hits ALK2 regardless of the causative FOP mutation. In preclinical mouse models of FOP, IPN60130 prevented heterotopic bone formation, reduced edema and restored healthy tissue response to muscle injury. A Phase I multiple ascending dose study in healthy volunteers showed that the drug was well tolerated. We anticipate initiating a registrational Phase II study early next year based on positive feedback from both the FDA and EMA. FDA previously granted IPN60130 rare pediatric disease designation, Orphan Drug Designation, which was also granted by EMA, and Fast Track designation. Next slide. In neuroscience, our pipeline consists of recombinant modified neurotoxins. And unlike bacterially derived botulinum neurotoxins, these are biological products manufactured using recombinant technology with E. coli. These can be modified to achieve differentiated therapeutic properties. The host cell contains a gene encoding for a light chain or proteolytic domain, a heavy-chain N-terminal or translocation domain with a heavy-chain C-terminal or binding domain responsible for neuro-specific targeting. IPN59011 or recombinant toxin A is a cationic BoNT due to the introduction of point mutations in the heavy-chain domain. A net positive charge drives increased interaction with a negatively charged plasma membrane with expected improved duration of activity. IPN10200 is a novel chimeric toxin formed by the light chain of BoNT/A and the heavy-chain binding domain of BoNT/B. This represents a novel mode of action through high-affinity binding via synaptotagmin-1 and 2. A longer duration of activity is also expected here. Next slide. Recombinant longer-acting neurotoxins are differentiated versus native bacterial toxins to address unmet medical needs. Potential therapeutic benefits include a longer duration of activity. A higher therapeutic index and less local and contralateral spread in nonclinical models may translate into a safer product, enabling a wider range of possible doses. Increased convenience is anticipated based on fewer injections per year. Benefits also include improved manufacturing control and increased IP protection. We plan to initiate both aesthetic and treatment indications with the recombinant long-acting toxins in the first quarter of next year. Next slide. Highlighting an earlier-stage platform in neuroscience therapeutic area are targeted secretion inhibitors. These are engineered proteins which contain a protease domain that enzymatically modifies SNARE family variants joined by a linker and a ligand, which is a cell-specific binding moiety that can be engineered to target a variety of cell types. This leads to possible uses in a wide variety of indications. TSIs block formation of the SNARE complex, preventing synaptic vesicle fusion so that they can be used to inhibit disease-causing secretion in the cells that they target. Potential initial indications being considered are in the chronic pain area and include chronic primary pain, post-surgical or post-traumatic pain and musculoskeletal pain. They can be engineered to target a variety of neuronal and non-neuronal cell types, and therefore, this has the potential to be a platform opportunity. They are expected to have high efficacy and a long duration of action and may confer potential safety benefits given the potential for reduced off-target binding. Assuming successful advancement, we anticipate the first candidate selection in the 2022, 2023 time frame. Next slide. So these are our targeted regulatory submissions over the next few years based on our existing pipeline. In August of this year, we filed in the EU for the approval of Cabometyx or cabozantinib plus nivolumab or Opdivo for first-line renal cell carcinoma. And this application is currently under review. Next year, depending on results of COSMIC-312, we anticipate filing for the approval of Cabometyx plus atezolizumab or Tecentriq in first-line hepatocellular carcinoma. Early next year, we also anticipate filing for the potential approval of palovarotene for FOP in the U.S. followed by the EU and for Dysport in the EU for the treatment of NDO or neurogenic detrusor overactivity. In 2022, we anticipate filing for Onivyde in the U.S. for second-line small cell lung cancer, which, as I mentioned, could be as early as next year based on an accelerated approval -- accelerated regulatory review. And in 2023 and beyond, potential filings for additional Cabometyx indications with Tecentriq in second-line non-small cell lung cancer and second-line metastatic castration-resistant prostate cancer and also for the approval of Onivyde in first-line pancreatic adenocarcinoma. Next slide. So in summary, our aim is to deliver meaningful treatments to patients living with cancer, rare disease and neurological disorders. This will be done by executing on our current pipeline to launch, having dedicated external innovation efforts to secure multiple in-licensed assets per year to build up the pipeline and prioritizing the pipeline to focus only on the highest-value programs. And we will be able to accomplish these ambitious objectives by having transformed and strengthened the Ipsen R&D organization. Thank you very much. And now we will have a 10-minute break. [Break]

[ My name is Bartosz Bednarz, and I lead ] global product and portfolio strategy with specific responsibility for global franchises and strategic business excellence. Welcome after the break. I want to build on the themes that you have heard today from David, Aymeric and Howard and speak to you about how Ipsen is delivering for patients in specialty care. We have a clear road map which is summarized in this slide. First and foremost, we intend to maximize the value of our core brands. We're proud of performance of Somatuline and Decapeptyl, which have achieved market leadership in the majority of the countries, and of Dysport, which is a strong #2 in its category. But we can do more with those products. Second, we will capture full potential of our innovative oncology portfolio. The contribution today from Cabometyx and Onivyde is already significant, and we expect this to grow much better with the potential addition of new indications. Third, we plan to execute a successful launch of palovarotene as part of our efforts to expand a rare disease presence and capabilities. We have had constructive dialogue with regulators, as you heard from Howard, which has prompted us to begin upscaling our launch readiness efforts. The fourth element is to expand our geographic presence. We already have a strong global footprint including much expanded presence in the U.S., but we see more opportunities to gain direct presence in some countries and to strengthen our portfolio in others. Finally, and this is what excites me the most, we're going to deliver great medicines to patients with excellence in execution. I do believe we're building on a strong base, but we do have opportunities to further leverage our infrastructure, commercial infrastructure and take commercial operations to the next level. Next slide. Our strategic review has reinforced our belief that we need to be present in our 3 therapeutic areas. And each Ipsen's portfolio comprises transformative medicines which address life-threatening and underserved diseases. Touching on a few examples. In renal cell carcinoma, until recently, only 12% of patients with metastatic disease survived 5 years. But new treatments like Cabometyx, chain point -- checkpoint inhibitors or combinations are transforming outcomes as we speak. Hepatocellular carcinoma is a fast progressing cancer, which only about 1/5 of patients manage to survive 5 years across all stages. Pancreatic has a notoriously poor 5-year survival, and there have been many attempts to bring new molecules without success. You heard about FOP. There is no cure, no treatment today for those patients. And finally, I believe David mentioned when you take a closer look at neuroscience or spasticity, only a very small percentage of patients are treated today with neurotoxins. Next slide. So let's take a closer look at our largest product, Somatuline, beginning with an overview of the overall market of neuroendocrine tumors. As you are aware, this is an attractive and growing space. Just looking at the last 5 years, NET market has expanded by close to 40%, growing at a high single-digit CAGR. Treatment tends to be for many years, so that new patients typically represent only 10% to 15% of the total in any year. There are only 2 main brands on the market. One is Somatuline, the other one is Sandostatin. Patient derived long-term benefits from SSA treatment. Hence, those treat -- those products are very well-established as a standard of care in the first-line NET. Next slide. We have delivered strong performance from Somatuline in the past 5 years, with sales compounding at 27% annually over the period. More importantly, we have achieved market leadership position in many countries including U.S. In fact, in 2020, Somatuline in the U.S. became market leader in both NET and acromegaly in terms of patient share. Our performance have been driven by a strong value proposition and the differentiation versus Sandostatin, or octreotide as it is known generically. Our differentiation span a number of dimensions, including clinical evidence of symptom control, tumor control or our unique delivery system, which is preferred by patients, nurses and which can be injected independently at home. Next slide. The differentiation I just described has not only driven our market leadership in Europe but also allowed us to continue to grow our market share since the first octreotide generic were launched in 2019. As a reminder, the first long-acting octreotide generic was approved in Europe in April 2019 and has since been launched in a number of European markets including Germany, Netherlands, France, U.K., Norway and Sweden. The charts on this slide show overall shares of the European SSA market on the left-hand side and specifically for those markets in which the generic octreotide has been launched on the right-hand side. The messages are clear. First, Somatuline continues to perform strongly and is gaining share. The second erosion curve for Sandostatin has followed more of a biosimilar curve than what you normally would see in the typical small molecule segments. Now we don't want to declare a victory as it is possible that this target launch and limited impact of generic has reflected supply constraint to date, but we're pleased with the performance of Somatuline in Europe in the past year. You should also note that so far, we have seen only limited impact on Somatuline pricing from octreotide generic. Next slide. Overall, we are confident we will deliver attractive growth from Somatuline until the point at which it faces generic erosion. So let me address this potential inflection, which David mentioned, is one of the challenges Ipsen expects to face. Our current position is as follows: as I have noted, Somatuline continues to gain share in Europe despite our octreotide generic presence. In the U.S., we would expect the octreotide generics to have greater impact due to the likely imposition of formulary step edits for new SSA patients. When it comes to lanreotide generics, we would expect a significantly greater impact to the generics because generics would be substitutable with the brand. We do, however, believe that the brand erosion curve will be closer to a biosimilar than a small molecule. So what do we know about additional generics, either octreotide in the U.S. or lanreotide. As far as the U.S. is concerned, we do not have any update on octreotide generic entry. And as a reminder, Somatuline has orphan drug exclusivity in GEP-NETs until December 2021. In Europe, we have limited information on the existing lanreotide generic application, which we know was submitted in March 2019. And our working assumption is that it could [ end ] to the market as soon as 2021, and this assumption is included in our midterm guidance. Next slide. I want to spend a little bit of time on Cabometyx now, which is a great product. And in fact, as David mentioned, it is a pipeline on its own. Since the first approval in second-line RCC in 2016, we have been in a constant launch, launch-readiness mode and rolling out 2 subsequent indications, first-line RCC monotherapy and second-line HCC monotherapy. We're now getting ready for launch for first-line RCC in combination with nivolumab based on the compelling 9-year data that this was discussed by Howard. Our expectation is that we will receive regulatory approval around mid-2020 now '21, and we'll be ready to launch on a country-by-country basis as and when reimbursement is established. Next on the horizon is the first-line HCC data in combination with atezolizumab, which we expect in first half 2021. Next up, in 2023, we expect a readout of 2 additional pivotal Phase III studies in non-small cell lung cancer and metastatic castration-resistant prostate cancer also in combination with atezolizumab. And as Howard noted, it doesn't end there as we have a number of potential additional indication opportunities in part arising from COSMIC-021 trial. Given strong base in our RCC business and risk-adjusted contribution from potential new indications, we now expect Cabometyx peak sales to exceed EUR 700 million. Next slide. Now great products don't always sell themselves, especially in the competitive environment. So this slide is particularly pleasing to me as it show that we have executed the launch of Cabometyx for the real excellence. In fact, today, Cabometyx is firmly established as a TKI of choice in the second-line RCC with an average market share of about 50% in its category. When you look at our market share in second-line HCC, in markets when we launched, we are above 30% on average despite the fact that we launched in Italy just recently. Next slide. So let me provide you a little bit of context on how we see the evolution of RCC market and the role of Cabometyx in the first and second line treatment today and in the future. So the graphic on the left shows today treatment landscape where first-line is still dominated by TKIs, while the combinations of being in the reimbursement process. The second line is dominated by nivolumab used subsequently after first-line TKIs are prescribed. On the right-hand side, you see that in the future, we expect combinations to dominate the first-line space. That will, in turn, limit the use of nivolumab in the second line and allow an extension of TKIs in this space. As far as Cabometyx is concerned, we see great potential in both settings. In the first line, we believe that compelling CheckMate 9ER data will allow us to compete effectively without a combination despite the fact that we're coming a little bit later than some of the other rivals. And then the second line, where Cabometyx is already well positioned as a TKI of choice due to strong METEOR data. We consequently expect it to benefit from expansion of TKI usage in this space. Next slide. Here, I would like to dimensionalize the first-line combination opportunity for Cabometyx based on EPI data. This is EU5. The key points to note is that there are around 40% more patients treated in the first line compared to the second line, but also that the duration of treatment with combinations is around twice as long, ranging from 16 to 14 months. Of course, we expect there to be challenges in some countries when it comes to market access, given reimbursement issues for combination therapies. However, the good news is we see that CPI and TKI combinations are gradually entering reimbursement system in Europe. Next slide. Here, I'm illustrating the HCC opportunity for Cabometyx in combination with atezolizumab. As you can see, if COSMIC-312 is successful, we could gain access to first-line patient population that is 2.5 sized the second-line population with an expected longer treatment duration based on the data reported for other combinations. As we have noted, COSMIC-312 will read out in first half of 2021 with potential approval in 2022, and we stand ready to leverage our already strong launch performance in the second-line HCC setting. Next slide. Now on my last slide regarding CABOMETYX, I'm taking a little look into the future, specifically into 2023, where we hope to be submitting 2 key new indications: second-line non-small cell lung cancer post combination of IO and chemo or after the sequence; and first second-line metastatic castration-resistant prostate cancer following 1 treatment of novel hormonal therapy medications. The graph on the left-hand side illustrates the EU5 patient opportunity in second-line and third-line non-small cells after adjusting for patients with oncogenic mutations such as EGFR or ALK. The overall patient call is large, as you can see, over 50,000 patients in the first line. And by the way, many of them would have already been treated with either combination of CPI and chemo or in sequence. On the right-hand side, we're looking at metastatic castration-resistant prostate cancer. Now here, the treatment algorithm is a little bit more complex. However, Our early estimations indicate that there are approximately 22,000 patients, high-risk patients in the first line and 13,000 patients in the second line. Approximately 50% of them would have been treated already with new hormonal therapy treatment. Of course, our leadership with Decapeptyl, we're very well positioned in the prostate cancer space. We have all the leadership and infrastructure that we need to bring this indication for Cabometyx to patients. Next slide. So let's switch now to Onivyde, our other innovative oncology asset, which we market in the United States from a second line of pancreatic cancer following gemcitabine-based therapy. As you heard from Howard, we have initiated trials in the second-line small cell lung cancer with potential for accelerated approval and just granted Fast Track designation as well as first-line PDAC with Fast Track designation, too. We are in the process of evaluating additional potential indications. The point I would like to stress here is that in regard of pancreatic cancer is the size of the first-line population. Again, when you look at this, it's 2.5 size, great -- 2.5x greater versus second line as well as there is much longer treatment duration of approximately 8 months versus 3 months. So this brings the opportunity for us to reach many more patients and for longer. The second line patient -- the second-line small cell patient opportunity is also quite significant, although not at the same scale with a potential treatable patient population of around 12,000 and a typical duration of treatment of about 5 months. Taken together, we have raised our peak sales expectations for Onivyde to an excess of EUR 300 million, which includes risk-adjusted sales from the new indications I've just described. Next slide. Now most importantly for patients, Onivyde may establish a new standard of care in these 2 new indications. First-line PDAC is a major unmet need with very poor treatment outcomes, reflecting the surge in need we received Fast Track designation from FDA. Given our existing leadership and infrastructure in the second-line treatment, we're well positioned to deliver this to patients if our Phase III study is successful in the first line. The second-line small cell is also exceptionally tough to treat with poor outcomes and with just topotecan as the only FDA-approved treatment in the second line. Our thesis is that Onivyde will provide greater efficacy with improved toxicity. If our Phase III study read out positive, we will be able to leverage our existing oncology infrastructure in the U.S. to launch this new indication. Next slide, Decapeptyl. Decapeptyl remains a key pillar of our Specialty Care portfolio. We have achieved market leadership in many countries. We continue to expect attractive growth in the market given that the androgen deprivation therapies are likely to remain standard-of-care and a backbone treatment of prostate cancer. Looking ahead, we expect to grow Decapeptyl faster than the market in majority of the countries we operate, although our overall performance will likely be constrained by the competitive conditions in China. Key to growth will be our patent-protected 6-month formulation, which we believe brings important convenience and compliance benefits to patients and physicians. Next slide. Now switching now to neuroscience and Dysport, the neurotoxin market continues to be very attractive with 9% CAGR over the last 5 years and growth coming from both therapeutics and aesthetics. Dysport net sales have gone in line with the market, achieving #2 market position globally and the #1 position in some emerging markets. I remind you that this is an unusual market and that the manufacturing process remain a key barrier to entry for potential competitors. Next slide. We continue to see opportunities for attractive market growth and development in both categories. In therapeutics, we see substantial potential for market expansion in spasticity given that in most countries, 80% to 90% of patients who would potentially benefit from neurotoxins are not treated. In aesthetics, the market is equally attractive, and there we're working with our partner, Galderma, to launch next-generation liquid toxin in the coming year. We're confident that in Galderma, we have the right partner to compete in a global aesthetic space. Next slide. If I turn to palovarotene, what is new is the following regulatory feedback on parts to submission, we're now back into launch readiness mode, building capability and plans to bring this product to patients as quickly as we can. Collaborate patients to identify treatable patient populations are ongoing. We're using various tools and methods, such as, for example, predictive analytics. We're also developing individualized high patch patient programs and, of course, building disease state awareness. Our intention is to bring this product to patients as swiftly and efficiently as we possibly can once we obviously receive regulatory approval as the unmet need is so high. Next slide. Now let me stress a very important point that Ipsen has a strong global and expanding footprint. More than 1/3 of our global revenue now comes from the United States as compared with just 5% a decade ago. We're present in 34 countries, and our products are available in more than 115. In most markets, we have a leading patient sharing categories we compete in. This not only allows Ipsen to maximize our own opportunities, but also makes us an attractive partner. Next slide, please. So zooming in our presence in the U.S., you can see we have had a very impressive growth. We have built strong commercial capabilities to support the growth of Somatuline, Onivyde and Dysport. Moving forward, we continue to maximize Somatuline and grow Dysport and therapeutics. We will be ready to execute successful launches of new Onivyde indications and of palovarotene, assuming we gain the requisite FDA approvals, and we will ready the organization to bring additional external innovation to patients. The performance of our U.S. affiliate is a top priority for Ipsen Specialty Care. On top of our own portfolio, including new indication and external innovations, We are looking for potential co-promotion opportunities to better leverage our strong infrastructure. Next slide. Thank you. So to summarize, I am confident Ipsen is positioned for long-term success in Specialty Care. This is based on our strong portfolio of assets and exciting life cycle management programs. Our leadership mindset, our carefully targeted markets and our expanding global footprint. And in all of this, we will bring a new level of commercial excellence to support the delivery of our long-term ambitions. Now I will hand back to David for his closing remarks.

Thank you, Bartek. So we're going to have our conclusion now. Next slide. So I think you have heard from us today, we have a clear vision, a clear strategy and I'm very confident that we are going to see a good development for the group in the coming years based on those pillars that I have outlined to you before. Next slide. I'm going to be joined now by several members of the executive leadership team. So we're going to have with us Howard Mayer, Aymeric Le Chatelier, that you have heard, Bartek as well. And we're also going to be joined by Philippe Lopes-Fernandes, who is our Head of Business Development; and Richard Paulson, who is our Head of the U.S. So with this, we are opening up for questions.

Great. So David, the first question is from Michael Leuchten of UBS. You flagged that you have above-average group structure. How much of that is a function of being a smaller company with overhead that cannot be absorbed and how much of that is directly addressable? And then after that, follow-up questions from Richard Vosser of JPMorgan and Eric Le Berrigaud, Bryan Garnier. Can you be more specific about where you see your peers in terms of average SG&A to sales ratio? Is that around 35% of sales? And then finally, another follow-up from Sarita Kapila from JPMorgan. You mentioned the goal was to bring SG&A spend more in line with the pharma peers. Do you anticipate a similar trend for R&D? Could R&D as a percentage of sales reach 24%? Thank you.

Very good. Thank you, Eugenia, So I'm going to address the first question from Michael. Do we have an overproportional overhead in comparison to, for example, large groups or other midsized groups? I would say, yes, it's slightly higher. Of course, midsize groups have, in general, a little higher overhead just due to the size. You can absorb the overhead better if you have a very large size. We have not quantified how much it is, but it must be in the small -- very, very small percentage or even decimal. But clearly, at Ipsen, I think we can do more efforts to become leaner. I'll give you just a couple of examples. We have 15,000 suppliers. I would estimate, and we looked at this with the purchasing group that we should actually have about 3,000. And of course, when you use that, you're going to have bigger volumes in terms of purchasing. You're better organized. You have, therefore, better conditions, but you also have, for example, less back office costs. So you will need less contracts, you need to have less accounting people being involved, et cetera. We also don't have yet systematically used shared service centers. So that's certainly something that we can further leverage. I think we have also a need to look at our office footprint. We have relatively many buildings, and I think we need to start to have a look at it. How can we optimize it. And I'm not talking now on the impact of COVID because with the new way of working, this might anyway reduce the office footprint that the whole industry is going to need because people have gotten used to working sometimes from home, perhaps 2 days from home, 3 days in the office. And so that's going to probably change the way we're going to work anyway. But besides that, I think we can also look at our footprint on building. So these are just a couple of examples. To the question of Richard, in terms of the average SG&A sales ratio, we have done a benchmarking and I have Aymeric respond to you on this question.

Yes. So David, maybe to complement, today, our level of SG&A is close to 40%, which is a pretty high level, which could be explained also by our Consumer Healthcare business, which are highest level of SG&A. If you really look at Specialty Care, I mean, our target is -- for Specialty Care business to be closer to what we see for a midsized player in Specialty Care, which is clearly more around or below 35%. And I think there was a question about the R&D as clearly, you have understood that our vision is really to be able to invest in R&D and by being able to lower SG&A ratio. I think there is a vast -- I mean, very vast scope of company depending on the model in terms of R&D spend. So clearly, we don't shoot for 20%, 24%. Today, we are around 15% of global sales. Our objective will be to continue to be efficient in R&D by continuous transformation, by prioritizing our program, but also by investing in external innovation. So you should expect that ratio to increase, but clearly not to the extent of the 24%.

Eugenia, we can take the next question.

Next question is around M&A. So one from Sachin Jain of Bank of America. Within the $3 billion, any color on the timing or size of deals, multiple small deals starting in '21 or 1 larger deal further out. And then from Richard Vosser of JPMorgan. In terms of your business development, how do you see the balance of spend between early, mid- and late-stage assets? What is the priority? You mentioned some gene therapy assets being examined for rare disease. Do you look to bring in technological capabilities or just assets? And then finally, in the presentation, you talked about the right number of assets. How many assets do you feel you need to in-license or deliver in order to deliver the growth profile that you're looking for?

So let me have a go at the first question on the EUR 3 billion at the timing of and the size. We have to be realistic. It's, of course, always a competitive field. So it's very hard to say exactly. And then to give you a forecast on the exact mix, we're going to see in the coming years. We are going to be driven by the quality of the opportunities. Of course, as I said, we need to have the right mix, right? So we will make a few late-stage deals, and we want to make many more preclinical Phase I deals and Phase II deals eventually because typically, they are less expensive. It is the space that I have told you where we need to refill the pipeline. But of course, we also need to potentially do 1 or 2 late-stage deals because, as you know, we have some ethylene expiring and potentially also in the United States. And there, we also want to actually strengthen our affiliate. We are looking, of course, also at co-promotion possibilities because that can help us bridge that phase until we find the right compounds. In terms of gene therapy because that was addressing also a bit Richard's question in terms of the mix. In terms of gene therapy, I'll let Howard answer that question.

Yes. Thank you, David. I think with gene therapy, obviously, we know what impact that gene therapy technologies could make in monogenic diseases, in rare diseases. So obviously, it's a space that we're going to be monitoring very closely. I think in the short term, we would really prioritize gene expression modifiers. So RNA approaches like antisense oligonucleotides and silencing RNA and those sorts of technologies. But still monitor vector-based gene transfer, AAV and Atezo/Beva and gene editing approaches. Obviously, we'll be monitoring those very closely. But early on, I think we're thinking more about just modifiers of gene expression. And I would say that if we did do a deal like that, we would have to bring in not just assets but also the know-how as well. I mean, I think, you need both. So that's what we would be trying to do.

And then there was a question on the right number. So when we did the long-range plan, analytics, we gave ourselves a target. We're not communicating around these targets, but it will have to be, of course, multiple deals in a given year.

All right. The next questions are around margin. So from Sachin Jain of Bank of America, there is a decent investor debate regarding the withdrawal of margin guidance, which reflects the numbers of scenarios and variability. Is there any floor margin that you can give? And then from Michael of UBS. Consensus at the moment models no core EBIT growth to 2024, I appreciate there are many moving parts to the margin dynamics, but will you be able to grow EBIT? Thank you.

So Aymeric, do you want to take this one?

Yes. Yes David. So thank you for the question. So yes, clearly, as you've seen, our core margin is going to depend on many, many factors. I mean the biggest one being clearly the timing of any additional SSA generic on the market of Somatuline. And clearly, this is something that we do not control, and you've seen the range of growth for our top line, and this is clearly reflecting the variety of scenario for the entry of SSA generic both in the U.S. or in other territories, especially in Europe. We have much more control about SG&A, and we talked about that before. And clearly, this will be also impacting our profitability and core level, depending on the opportunity we will be able to execute on our external innovation. So the reason why there is today no margin guidance is really to let you appreciate clearly the impact of those parameters. So we will be committed to clearly deliver on the savings and be able to manage the entire OpEx appropriately, but this will highly depend on those 2 parameters. And on top of that, as you know, the life cycle management of our products will also impact the range of guidance of our top line and consequently of our profitability.

So the next question comes from Louise Pearson of Redburn. Question on Onivyde in the first-line PDAC setting. Given that the overall survival in that setting is around a year, is there any upside to the potential time line for headline data from NAPOLI-3 as 2023 seems quite conservative?

Howard, do you want to take this one and give us some hope?

Sure, David. So let me just say that the study is enrolling. The study is enrolling quite well despite the fact that we're in a pandemic. We have seen steady enrollment in the study. So we're optimistic. Just to sort of to say that basically this is a 750-patient study. So part of the time line will also be enrolling patients in addition to the number of events that are required. But we're giving you our base case, but there's always the possibility that we will beat that. And we're working really hard to try to achieve the end of this study and the results as quickly as we possibly can. As you know, we have FDA Fast Track designation for this. So we're talking to the regulators about this -- about expediting things. But we're enrolling the study as quickly as we can and hope to get to an answer sooner rather than later.

Okay. Great. So the next questions are around Cabometyx. First, from Sachin of Bank of America and Eric Le Berrigaud of Brayn Garnier regarding the new peak year sales of EUR 700 million. How much of that is coming from existing indications like CheckMate 9ER? And how many from the other ones? And then a follow-up from Michael of UBS. Can you please provide an update on how you think you could gain IP protection for Cabometyx in China in case the HCC indication comes through? And then also, can you speak to how you have risk-adjusted COSMIC-312 or how you think about risk adjustment from a clinical as well as a commercial perspective? Thank you.

Okay. Very good. So Bartek, perhaps you can explain how is the mix structure. I mean, we are not giving, of course, the real detail, but we can kind of give you a sentiment, I would say.

Yes. I think we have been speaking in the past about the peak sales of EUR 400 million. We have now increased this just to include all the new indications, but I would say the majority of that is going to come from what we call the core business, which is the indications in renal cancer and the first indication in HCC.

I mean, you need to remember also in this calculation that the metastatic castrate resistant and the lung cancer come out a little bit later, and they are, of course, risk-adjusted in this modeling. So if they hit, of course, the mix can substantially change. So that's just something to keep in mind. But that's how we have modeled it. Then on the update on IP Cabo China, hepatocellular carcinoma. So as you probably know, we don't have an IP on the active substance, the API in China. However, we are looking at the combination patent possibilities and that's ongoing. Regarding the risk on the 312 adjustments on the clinical and commercial. Perhaps Howard, you can talk a little bit about the probability of success that we are thinking about on hepatocellular. And then I will lead to Bartek regarding the calculations and the risk adjustment on the commercial side.

Yes. I mean, I'm not -- maybe I'll give you just a way that we're thinking about the study better than a number, which I'm thinking about giving or not giving. But just to think about how we're thinking about the study itself, I mean, we know that cabozantinib is approved in second line in hepatocellular carcinoma. So that's number one. The second observation is that atezo has shown impressive clinical results. So that's atezo in combination with antigenic therapy. So you have cabozantinib that has antigenic properties and TKI properties. So we think about that, which is encouraging. The study is enrolled. We already know that in other malignancies that cabozantinib in combination with checkpoint inhibitors provides an immuno permissive environment by decreasing Tregs, increasing CDI-positive lymphocytes. So I think for all of those reasons, I think we're cautiously optimistic about the results and give it a relatively high probability of success.

And I hope we understand the question right on the commercial aspects. Perhaps it's more linked to the competition and how competitive we think the regimen is going to be. And Howard just mentioned the Avastin combination. So Bartek, can you say a couple of points about this?

Yes. So I would like to say that because I'm working with Howard very well. I normally take with discipline probability of success that he is establishing. But this is true that in this particular case, it's not just hitting the study results. We also realized that we have to hit the high bar, which is already established by Atezo/Beva. And that we're conscious -- absolutely conscious about, but at the same time, Cabometyx has been delivering with discipline across multiple different indications, including HCC. So we obviously have good hopes moving forward that we will have a good and effective combination being used in the first-line HCC.

There are, of course, other combinations ongoing, right? So we have to be mindful about this one, and we have integrated that in our thinking. So perhaps we can take the next question, Eugenia.

Great. The next question from Matthew Weston of Credit Suisse. 2 questions on pricing. Ipsen relies on a large legacy portfolio, especially Somatuline and Decapeptyl. In a post-COVID environment, do you expect increased austerity to impact European drug pricing? Do you see any signs of increasing pressure? And what do you assume in 2024 guidance? And then the next question, President Trump recent executive order calls for the most favored nation pricing in Part B, which could have a major impact on Somatuline. Do you assume that the executive order will be implemented or delayed by port challenges and also will Ipsen challenge? Thank you.

So on the large legacy and the post-COVID impact. So it's a bit early to say are government is going to try to come back to pharma in general and ask for pricing reductions. What we do know is, and we have been in a lot in interaction, for example, with the French government that the French government has actually increased the budget because they see that there are on some of the established compounds that probably Europe has gone too far and this has led to a dislocation of some of the production sites to India and to China. And I think that trend to think about the sovereignty of having production sites on European ground is potentially going to become a consideration that governments will, in Europe, have to integrate. In the U.S., we have to see what the Biden administration is going to do. Clearly, I would say, on both sides of the Atlantic, we have baked in obviously, some pricing impact also with new combinations, for example, in the first-line renal cell, where we see a certain decrease because when you expand the volume, they are going to ask for certain volume discounts. So we have built this in, for example, for Cabometyx in Europe. And so therefore, it is in our current guidance. Regarding Trump's most favorite nation clause. I will start, and then I will ask Richard if he wants to add something. So this is very recent. I think it's a bit unusual that an exiting President implements kind of in the last weeks, those kind of policies. I would say these policies have been implemented, ignoring certain aspects of the normal process when you implement these policies. And therefore, can be challenged by different stakeholders in the environment. It can be health care organizations. It can be an ASCO. It will be probably a pharma. It will be probably a bio who are going to challenge this policy. You have seen the New York Times article where actually the current President Trump has said he believes it's not going to go through. So we will see what happens. We all don't have a crystal ball. Is it going to be a topic for the future in terms of prices in the U.S.? Most probably it will be. We have to be realistic. So we have to see what happens. Richard, anything you want to add?

No, nothing in addition, David.

All right. Next questions are also around the midterm financial outlook. So from Emily Field of Barclays. What's the biggest variable on the OpEx line that prevented the establishment of a 2024 margin target? It would seem that this could be R&D given that it seems to be contingent on potential M&A. How wide could this figure range in terms of a percentage of revenue? And then 2 questions from Sachin Jain of Bank of America and also Michael from UBS regarding the top line. So what are the main deltas between the 2% and 5% end of the guide? How much of it is palovarotene, Cabometyx line extensions versus the rate of the Somatuline decline to 24 consensus has about a EUR 400 million Somatuline decline. Can you comment on your assumptions related to that? Thank you.

Okay. On the top line delta, obviously, a big factor is the timing of the arrival of generics and the number of the arrival of generics that plays a big role. That's logical. We're not going to confirm the EUR 400 million decline. What we tried to do is to help you with analogies on the octreotide generic impact. And I think Bartek has spent quite some time on walking you through that. And I think that can help inform your modeling. I think our hypothesis is it's going to be more a biosimilar erosion curve like. And as I said, it, of course, not just depends on the curve, but it depends also on the timing. And also, I would say, the amplitudes where they're going to launch. I mean, you have seen that octreotide generics were not launched everywhere. They were launched only in the large markets. If you look at it in Germany, France and U.K., that's it. You have the Netherlands and Sweden. But -- so there must be something going on with the production. It's certainly more difficult to produce that people like to think. So in that sense, we have to see what's happening on Somatuline potential generics. Then the second factor is cabo. When you take the risk adjustment or not risk-adjusted sales, of course, there is a big variance. But in terms of the 2% to 5% difference driving, I think there, it's really not so much cabo because we're quite confident with the first-line renal cell indication, which is, of course, the major part of driving up to 2024 the sales because we've shown you before that the other indications are mainly coming in 2022, the launch or in the 2020, probably 3, 4 period, right? So it's going to have less of an impact. It's more towards the end of the 2024 period. And palovarotene, so of course, palovarotene can play a role. So we have to see that we get the registration. We are hopeful that we're going to get it. The feedback with the authorities so far was encouraging that we should submit. Now it will depend, of course, on the review and on the label that we're going to see. So there is a portion of that 2% to 5% delta, which obviously also comes from palovarotene.

All right. Next question is a follow-up from Emily Field of Barclays. It would seem that the forward midterm guidance language around Decapeptyl assumes that it's unlikely to be added to the VBP program in China. What gives the company confidence there given that a year ago, we were discussing this as a potential outcome? Thank you.

That, I would like to correct that perception. We have actually assumed that Decapeptyl is going to Phase A more generics and the volume-based procurement in that time frame of 2024. So we see a lot of growth potential for Decapeptyl based on other factors. We are going to bring the 6 months version to China. So far, we have the 1 month, and that's a relatively competitive space. But on the 6 months, there is not really a lot of competition, and it's also a hardly produced formulation. So that's for China. And then also, we see some good sales potential in the international markets for Decapeptyl where we are being present, including Europe. The 6 months is really making things easier for patients to get the injection.

All right. And your last question comes from Matthew Weston of Credit Suisse. Innovation in novel neurotoxins has been part of the Ipsen strategy for over 10 years but with very, very modest success. Peers have also failed. Why is the new generation of novel neurotoxins going to be different? Thank you.

Howard, do you want to take this one?

Sure. Thanks, David. So I would say that we have strategically designed these recombinant toxins to have a longer duration of activity. And as I mentioned in my talk that we have 2 shots on goal for that. One is recombinant toxin A. And one is recombinant toxin AB. And both of those actually met our product profile in very relevant preclinical pharmacology models versus bacterially derived toxins. So we think that these have generally translated in the past and have a good chance to translate moving forward into longer-acting toxins. And as I mentioned, we're starting clinical trials early next year, both in aesthetic and in treatment indications. Also want to mention that as part of the R&D transformation, I've hired a Head of Neuroscience, a Head of Research, and we have a dedicated asset lead for this program, all of whom have really worked very hard to try to streamline and accelerate the program. So we feel really optimistic about our chances with both products.

Very good. With this, if there are no more questions, Eugenia, you...

Actually, there's just one more that came in. So if you don't mind, we can take one more question. It's from Delphine Le Louet from Societe Generale. So great envelope for investing over the next 3 years. Can we get; one, the breakdown between external and internal R&D investment; and two, the timing for investment ramp-up? And then the next question, we expected for many years now the strategic review of the Consumer Healthcare. In 3 years, the division revenues have been cut by 30%. What makes the Board change its view on consumer care? And what's new on the equation versus 2 years ago?

So let me start with the EUR 3 billion breakdown on internal, external. So the EUR 3 billion is really the firepower that we have, for example, for upfront payments or for milestones, et cetera. The EUR 3 billion do not contain what we have on the R&D spend for our pipeline once it's included in the company. So not to be mixed up. It's really the firepower for bringing in molecules or for acquisition. I'm not quite sure I understood the timing question. Perhaps you can just clarify that in the -- I don't know, Eugenia, if...

I think it's referring to the timing for the investment over the next 3 years in terms of business development.

Yes. I think I answered that before.

Yes.

So it's going to be opportunity-driven really. We don't set clear time lines. Of course, we have a certain number of deals that we want to do each year. The mix can be different. But we don't have a fixed timing in that sense. We really want to make the right deals. I think that's the most important point. In terms of CHC, clearly, when you look at the size of the business, it's now representing about 8% of the company. Clearly, we cannot be active everywhere. We need to really make bets where we put the majority of our money. While we are doing this strategic review, we are focusing on CHC to get the business back in good form, especially now that it's being hit by COVID. So we need to protect the profit there. And we have to see once COVID-19 has passed, where we take it from there. So that are the questions that we're going to address in the strategic review. As said, we are progressing well.

I think that's it for...

That was the last question.

Yes.

So this is concluding our Capital Markets Day. Thank you for attending, and I wish you a great day. I think we're going to see us potentially again at JPMorgan or at our annual results presentation. Thank you very much.