Lotus Pharmaceutical Co., Ltd. (1795) Earnings Call Transcript & Summary

Good afternoon, everyone. Thank you for joining today's First Quarter 2025 Earnings Call for Lotus Pharma, ticker 1795.tw. This call will be conducted in English with a replay available after the event. Founded in 1966, Lotus is an international pharmaceutical company with a global presence in the commercialization of both novel and generic drugs, and has established operations in global markets including the U.S., Europe, Japan, China and Brazil. Company management attending the call today include Mr. Petar Vazharov, Chief Executive Officer; and Bjartur Shen, Vice President of Strategies and Finance. The call will consist of a company presentation, followed by a Q&A session at the end. Now I will pass on the mic to Mr. Vazharov to start us off with a company presentation.

Thank you very much, Jack. Good morning or good afternoon to everyone who has dialed in, and thank you for your continuous support and interest in Lotus. As usual, I'll first go over Lotus results and business highlights, give you an overview of our latest achievements and progress. And I'll then pass on to Bjartur to go over through financials in more details. So first, to start with, I'm very happy to announce that we have delivered a very strong start to 2025 where we achieved a set of record-breaking first quarter results, which was obviously possible due to excellent execution of our diversified growth strategy. Revenue reached TWD 4.7 billion, which represents 13% year-on-year growth. EPS came in at TWD 5.47 per share, representing a 38% year-on-year increase, again, both our new quarter 1 record for the company. Looking at our gross margin, it was up 6.7 percentage points compared to same period of last year, reaching 61.6% during the quarter. This improvement was primarily driven by a greater contribution of higher-margin products, in particular, our oral oncology products, which are being commercialized mainly, of course, in U.S., also markets outside Asia but also in some Asian markets. Moving down, we have also maintained a healthy operating margin of 36.2%, underscoring our strong operational execution. Now let's look at the 2 segments of our business in Asian markets. Revenue reached [ 20% ] year-on-year growth, which was mainly contributed by Thailand and Vietnam. In Thailand, we have successfully completed the integration of Lotus and Teva businesses, strengthening our local presence and achieving synergies, which were laid down initially in the business plan. So this helped Thailand -- Thai market for Lotus achieving growth of 500% year-on-year. So it's very important to, obviously, not only to have a good deal, in this case, the acquisition of Teva commercial business, but also a successful integration and execution post the deal, which we have in place obviously in Taiwan. In Vietnam, we have achieved successful takeover of our Alpha Choay business from Sanofi. By takeover, I mean, successful handover of commercial activities. So we are currently basically doing the commercial activities for the product, along with our distribution partner, Zuellig. Typically, this is one of the risks in brand acquisition deals. Post deal signing, there's always risk when you take over the commercial product. In this case, I mean, I'm happy to report that this was done in an excellent manner -- basically in an excellent manner. So obviously, extremely well done by Lotus team and also, of course, thanks for cooperation from Sanofi as well as Zuellig Pharma. So overall, I mean, this deal has helped us to achieve a 750% growth in Vietnam, which is our biggest market for the time being in Southeast Asia compared to same period of last year. So happy to see these results. So going to Korea. In Korea, the highlight is we have entered in a partnership with CKD, which is a leading company in Korea, co-promotional partnership for their biosimilar, darbepoetin alfa. This is a long-acting erythropoietin, which is the only biosimilar long-acting erythropoietin approved in the Korean market. And this is obviously testimony for our strong presence in nephrology. So CKD choose us as a commercial partner. And definitely, this product will reinforce our position in this segment. So overall, we launched 15 SKUs in Asia during first quarter. Now switching to export markets. It increased 14% year-on-year, and this was mainly driven by sales of our flagship product, lenalidomide, in the U.S. And overall, we have launched 13 SKUs in export markets. So now I'd like to give you an update on our pipeline. So, so far, we are progressing very well with our strategic objective to continue building a hybrid pipeline, which is a prerequisite for sustainable and profitable growth of the company as we discussed on several meetings already. This is -- we feel that this is a critical success factor in the industry being so competitive on having a pipeline, which contains not only generic products but also innovation is the backbone of our success so far, and we believe also it will translate ultimately in continuous and profitable growth going forward. Looking at the filings year-to-date. The most important filings, obviously Voclosporin in the U.S. This is an NSC-1 filing. It's a soft gel product, which is complex manufacturing and development. And the challenge, in general with NSC-1 filing is that there's a single date where you have to place -- to submit the dossier, it cannot be earlier. This is linked with obviously patent expiries. And if you should delay the -- I mean if you file it afterwards, it's kind of losing the momentum. The product becomes too much [indiscernible]. So in this case, we succeeded. We have -- happy to report successful filing. In the U.S., FDA has accepted our filing, as you know. And of course, the launch will be determined by relevant patent expiries in the U.S. market. We have also filed ruxolitinib immediate release formulation in some EU markets and this will follow obviously by filing in Asian markets based on having specific document, which will allow us, it's called CPP based on the EU approval later this year. Going through the approvals year-to-date, I would like to highlight Adcirca approval in Taiwan. So this is effectively a new chemical entity. And this is the first and only Class 1 ERA therapy. So indication is pulmonary hypertension. So this is an increasingly important indication because this is a medical condition with high incidence and high rate of diagnosis and there are not many available treatment. So we are -- as you know, we have in-licensed the product rights from Eli Lilly and we are effectively now working on the launch. So we are preparing the launch as a marketing activity and also manufacturing the product. So this will be a launch in Q3 this year. We have also launched pomalidomide in U.K. through our partner. So this is internally developed product for compound [ pomalidomide ] and we will continue with launching pomalidomide in EU, also through a partner from Q2 onwards. So the target and the objective and we are well positioned for that is to launch across EU markets in the next 6 months. And we have already secured a partnership with a Pan-European pharmaceutical company, which has obviously resources -- commercial resources to execute this launch. We have also enzalutamide approved in Korea now. This is important because this is going to be a launch on day 1. And we are, for the time being, the only company which has approval in Korea. This is an important product because we have already a very strong business in Korea in prostate cancer segment. And this drug obviously definitely will reinforce our position, and we think this will be a successful launch. Also received approval for dydrogesterone in EU. This is a niche oral contraceptive, which we are planning to launch later this year. Alpha Choay, I already talked about this. It's not really a launch from scratch, but it's more takeover of the business, like I said, from Sanofi. This was, again, executed in an excellent manner. Darbepoetin already mentioned partnership with Korea. Pomalidomide also launch in U.K. And nintedanib, we haven't launched the product yet because it's -- the launch is subject to patent expiry in the relevant markets. However, we are preparing the launch. This is going to be our biggest launch, as you know, based on our 5-year plan from internal development. And the launch preparation is going very well. So the team is focused on making this a big success. Last but not least, on key licensing agreements, which have been finalized, signed year-to-date. I'm happy to report that we closed 3 deals for 3 major products. These are all innovative products. I'll start with serplulimab, this is a PD-1 monoclonal antibody developed by Henlius. This is basically a product, which is indicated for small cell lung cancer. We have secured the rights for Korea, which is our -- basically the biggest market for this indication and we have extensively discussed with Korean authorities. And we're very happy that we have obtained orphan drug designation status, which means that the product will go through a fast-track approval, it could be less than 1 year. And also we will get 6 to 10 years data exclusivity. So we are very excited with this deal, and Henlius already successfully launched the product and received post approval in EU. So it's going to be quite exciting to launch the product hopefully next year. The second product is Qelbree. This is ADHD, attention deficit product in-licensed from a U.S. company. The product is already approved in U.S. and already in the market with a very strong sales uptake. And the good thing about this product that this is a nonstimulate ADHD product unlike methylphenidate. It's indicated both for children as well as adults and we have secured here broad territory, including South Korea, Hong Kong, Taiwan as well as all Southeast Asian markets. And last but not least, this is obviously the deal with LENZ for aceclidine. Aceclidine is a game-changer product in treatment of presbyopia. LENZ have completed successfully a Phase III study, which shows very strong results and value proposition for the product, and they have filed the product in the U.S. and they're expecting approval during quarter 3. So this is a very exciting product. And obviously, we have been initially motivated to discuss this product because it's in ophthalmology mainly because of Thai market where we have, as you know, secured a leading position in this therapeutic area through Teva acquisition. But we feel that this product would be an ultimate success in South Korea, also opportunity in Southeast Asia. Unfortunately, rights for Taiwan are not available. But I mean, we might try to get the rights at a later stage for Taiwan market. Next slide. So moving basically to a pipeline summary. As of today, we have a total of 65 active projects in development and also under discussions from business development with relevant third-parties. So this is a quite rich pipeline. And again, this is a combination of generic products, which is mainly driven by internal development as well as branded products; innovation products, which is mainly driven by business development. So on the R&D side, we have 30 active ongoing projects with strategic focus on oncology and immunology reflecting on our commitment in high-value, high-barrier therapies, also providing access to patients at a lower cost. From our business development, we are in discussions currently for 35 products for in-licensing opportunities. So these are obviously projects with more diversified therapeutic areas, not only oncology, but also we have CNS, primary care, lifestyle and nephrology. So again, like I said at the beginning, so we firmly believe that creating and continuously building -- evolving a hybrid pipeline of products is a critical success factor for continuous double-digit and profitable growth of the business. And this, of course, we remain always focused for the company. Now going specifically on the R&D piece, we have 30 ongoing projects, as you can see here. Basically, the breakdown by type of projects, we have 11 first-to-file opportunities. This is mainly U.S., obviously, U.S.-targeted products. Another 13 products under development, which are scheduled to be launched on day 1. Day 1 means patent expiry in the relevant territories, key markets, at least. And we have also added 6 505(b)2 programs, which are effectively branded products. So this is a change of focus of R&D. In the last 2, 3 years, R&D was mainly focused on generic development first-to-file on day 1. Now we added more complexity because we have much more resources in terms of portfolio selection and also more resources in terms of development capabilities because, as you know, we have moved also our development center to India. New thing, which we have been doing since more or less middle of last year is the co-development agreements. So the objective of the co-development agreements here is obviously to partner with companies, which have access to unique technology or unique IP. What I mean by unique IP is sometimes there are companies, especially API companies, which are developing a particular API with -- which based on a specific process, based on specific [indiscernible], which allows you to launch the product in the U.S., let's say, or in Europe 1, 2, sometimes 3 years earlier. This is obviously a huge upside. And we have identified several products relevant companies, and we have entered in a partnership. Same applies for technology. Obviously, we cannot do everything in-house. We don't have access to all technologies available. And -- but of course, there are a lot of companies, which are not only having the technology but also have proven, validated and delivered success based on this technology. So we are working on identifying products and prospective partners and entering a co-development or contract development agreement. So this is obviously a coordination work between R&D and business development, but effectively the co-development part will be executed by our development team. So this is very important because by doing this, we are diversifying our product portfolio coming from the development -- own development. So we are not relying only on the in-house technology, but we can scale up in terms of more complex technology and more complex IP. Overall, year-to-date, we have initiated 5 new projects, 1 in oncology and 4 in primary care. So it's quite good progress. Now moving to the business development. So we have 35 projects under discussions, 18 new chemical entities, 3 505(b)2, 4 biosimilars, 3 branded products. When I say branded products, these are basically we are discussing with companies, which potentially have products -- branded products for divestment type of Eli Lilly or Sanofi deal and also a few deals for generic products, which will mainly complement our pipeline in Southeast Asia. Like I said at the beginning, our objective here is obviously business development to deliver through the pipeline innovation. I mean, we will never engage in development of new chemical entities due to the risk. Typically, what we are doing here we are targeting products, which have already achieved through proven concept stage, past successful Phase II or Phase III study or sometimes even approved and launch in U.S. market. I mean, obviously, Henlius deal is an example for serplulimab, the product is already approved in EU. Like I said, LENZ deal for presbyopia product which we have a product, which already passed Phase III and already filed -- accepted by U.S. FDA and the same applies for ADHD product, which is even launched on the market. So this obviously mitigates the development regulatory risk and give us much more confidence that this will be ultimately a successful project. Okay. We can go to the next slide. I think over to you, Bjartur.

So first, let me walk you through our financial results of the first quarter of 2025. As Petar mentioned, had an excellent start to the year, delivering 4.7 billion in revenue, which represents a solid 13% year-on-year growth...

I think, Bjartur, sorry, but I think you should speak closer to the microphone.

Right. So our performance was strong across the board in Asia. Revenue grew 4% to TWD 2.6 billion, driven primarily by the outstanding performance in Thailand and Vietnam. And the Southeast Asian cluster performed exceptionally well, growing threefold compared to the last year. And this growth was fueled by the consolidation of Thailand business as well the position of [indiscernible] Vietnam and Cambodian operations. For the export markets, revenue grew approximately 14%, reaching TWD 2.1 billion led by robust growth in U.S. where revenue rose by approximately 30% this quarter. So our gross margin improved significantly, averaging 62% in Q1, which was approximately 7 percentage points higher than the same period last year. This improvement was primarily driven by a higher contribution from higher-margin export products such as lenalidomide as well as the addition of Alpha Choay in Asia, which delivered an outstanding 87% gross margin. Our integrated [indiscernible] operation in Thailand, which also delivered a strong gross margin of 62% on average. Now moving to operating expenses, our SG&A costs increased about 13% year-on-year. The main driver was the addition of sales and marketing expenses in Thailand and Vietnam, which accounted for almost 60% of the increase. And the remaining 40% came from higher payroll and the benefits. R&D expenses rose by about 44%, which is also mainly due to the increased the payroll costs. Despite these increases, our overall operating expenses ratio remained stable at 25% of the revenue, which is consistent with Q1 of last year and slightly lower than the full year 2024 average of 26%. Our operating margin improved to 36% this quarter, up 4 percentage points from 2024 average. Overall, for the past 3 years of our operating margin has steadily risen from 28% in 2022 to 32% in 2024. And this reflects our ability to consistently expect gross margins as well as keeping the operating cost growth at a moderate pace. Now turning to the nonoperating income and expenses. The net financing costs were TWD 117.5 million, down approximately 9% year-on-year, thanks mainly to the higher interest income from our cash deposits. We recorded also an other gain of [ TWD 113.5 million ] in Q1, primarily due to the favorable exchange rate movement. However, as [indiscernible], we also believe that the trend of favorable U.S. dollar versus Taiwanese dollars, the trend will reverse in Q2 and the recent appreciation of Taiwanese dollars against USD in May could lead to a sizable FX -- ForEx loss. And that said, loss is most likely to be a onetime event, assuming the U.S. dollar stabilizes at the current level. Should the U.S. dollar strengthen, however, later in the year, the company may recover [indiscernible] the losses in Q2. It's worth noting that while the devaluation of the U.S. dollar impacts the top line revenue, its effect on gross and operating profit is much smaller. And this is because the majority of Lotus' costs and investments are also denominated in foreign currencies, predominantly U.S. dollars, which offsets some of the ForEx impact over the past 12 months. Our U.S. dollar GAAP stood at about $60 million, roughly about 10% of the group's revenue, and this is mainly related to we have to change U.S. dollars to Taiwanese dollars for larger payments such as dividends, taxes and longer payments. While the company reports in Taiwanese dollars, our operations remain largely foreign currency based. So finally, on the bottom line, we delivered net earnings of $5.47 per share in Q1, which is a remarkable 38% increase year-over-year. And this quarter [indiscernible] as the third most profitable in other company's history. Looking forward, we remain laser focused on maintaining this momentum and delivering strong results throughout the rest of the year despite of the challenging macroeconomic environment. Now moving to the next slide, we can go through our Q1 revenue write-down and highlight the key changes year-over-year between 2024 and 2025. Starting with Asia, revenues in the region grew 12% year-over-year. Southeast Asia was the major driver with revenue climbing by TWD 327 million, thanks to the integration of [indiscernible] Vietnam and the Teva business in Thailand into our existing operations. And in Thailand, revenue this quarter grew more than 4x year-over-year, reaching approximately TWD 230 million. And Vietnam also showed very strong growth with revenue coming in around TWD 160 million. In total, Southeast Asia contributed TWD 425 million this quarter, up from less than TWD 100 million a year ago. Our Thailand domestic business was up 4% to TWD 650 million. Meanwhile, Korea saw a decline of 5% mainly due timing differences of revenue. Export revenue increased 14% year-over-year, largely driven by the strong lenalidomide sales to the U.S. The U.S. sales rose by around TWD 450 million, which helped to offset the decline, about TWD 195 million, in exports to the rest of the world. Again, that was mainly timing related. And next slide, yes, this quarter, about 55% of our total revenue came from Asia with remaining 45% from global exports. And the U.S. remains our largest single market and contributing roughly 40% of total revenue. Within Asia, Korea's share of revenue declined from 38% of last year to about 32% of the total revenue this year. And the rest of Asia increased from 3% to 10% and Taiwan held steady contributing around 14% of our total revenue. Breaking down by product type. Branded product sales made up about 25% of our total revenue. And generics in Asia accounted for about 30% and export of generic products outside Asia contributes about 45% of this quarter's total revenue. And then finally, let's take a look at cash and capital structure. The company carried approximately [ TWD 2.86 billion ] in operating cash inflow this quarter, which was about TWD 1 billion higher than in the same period last year. After paying interests and taxes, [indiscernible] [ TWD 2.7 billion ]. Out of the cash inflow, we invested approximately [ TWD 1.35 million ] this quarter, mostly from the Alpha Choay acquisition from Sanofi. And the remaining cash was [indiscernible] revolving credit facility, which remaining available [indiscernible]. So as a result, we ended the quarter with a stronger cash position of [ TWD 5.6 billion ] [indiscernible] At quarter end [indiscernible] debt was at [indiscernible] Our gross deb ratio dropped to 57% down from 63% a year ago. There is the taking out of the cash on hand [indiscernible] improved to 37% from the 48% last year. Lastly, LTM EBITDA over the 12 past months increased significantly from approximately [ TWD 6 billion to approximately TWD 8.3 billion ], which is [indiscernible] which reflects the company's increasingly strong financial position. So lastly [indiscernible] recent development in the U.S. market. There are a number of new uncertainties and concerns. So recently we were talking about tariffs as one of the foremost [indiscernible] and so while we are fortunate to have [indiscernible] global [indiscernible] here in the U.S. there is a growing concern that [indiscernible] But we are not [indiscernible] back to the U.S. However, [indiscernible] business [indiscernible] So in other words, we have [indiscernible] U.S. uncertainty. And we have [indiscernible] including [indiscernible] Moving to the [indiscernible] drug pricing, which [indiscernible] to ensure [indiscernible]. There are the [indiscernible] uncertainty [indiscernible] from the industry [indiscernible] very unlikely to [indiscernible]. So let's not forget there's that [indiscernible] make up for [ 19% ] of the total U.S. market while [indiscernible] a 100% of [indiscernible]. And so we [indiscernible] from the [indiscernible] we will continue to monitor the situation [indiscernible] So moving on to the last slide to sum up our formula for sustainable long-term growth. So Lotus' formula for sustainable long-term growth [indiscernible]. So number one, develop products in-house [indiscernible] products individually over the next 5 years [indiscernible] pipeline from our internal development then bring a potential revenue [indiscernible] And secondly, to complement our recent developments, [indiscernible] potential product from [indiscernible] elsewhere in patients. And those [indiscernible] products that have high potential in our [indiscernible] markets. And the [indiscernible] revenue potential over the next 5 years. [indiscernible] over $400 million of cumulative revenue [indiscernible] the company over the next 5 years. [indiscernible]. We will also focus on -- to acquire companies with platform [indiscernible] to create synergy with our business. [indiscernible] additional revenue potential that we are working on [indiscernible]. So with that, I will [indiscernible].

[Operator Instructions] While questions are coming in from the investors. Perhaps I can start off with a couple of questions on my own, and we can go off to the investor questions after. So I think we understand that we touched on this a little bit earlier, but just wanted to drill down a bit more on the tariff situation. Just curious in terms of our current operation and I think you mentioned in the long term that potentially you might need to consider moving some manufacturing into the U.S. Could you be -- would you be able to kind of frame it for us in terms of, I think, one, with our current infrastructure, how much of the tariff might we be able to pass on to whether downstream or upstream to our vendors? So how much of that might we need to absorb if there is a tariff that does come down. And I think, two, in terms of the manufacturing change, how -- have we done kind of exploratory analysis in terms of how much might that impact us in terms of margins, whether we have -- we might have to move some of the manufacturing into the U.S. or even elsewhere in the world versus kind of our current setup. So let me start off with this question.

Yes, I'll take this question. I think, basically, what Bjartur explained is that we don't see an imminent impact on us if they impose tariffs tomorrow because, effectively, we have inventory for our flagship product, lenalidomide, until 2026 including, right? So for '25, '26, the inventory is already imported in the U.S. So this cannot be obviously subject to tariff. And buprenorphine/naloxone, which is the other product we have from the market already in the U.S. is being manufactured locally. So it will, for sure, not be impacted by the tariffs. Of course, for the pipeline, I mean if there are tariffs in place, there will be an impact. But like we said, I mean, we can mitigate this. First of all, I think with our pipeline, which is mainly in oral oncology for the U.S., the cost of goods is typically quite low because these are products with high market price and there's room to absorb the tariff. This is one. Second is, I mean, we have a strategic partnership with Alvogen for many years already, and they have excellent manufacturing setup in the U.S. It's true that they don't have oral oncology capability now, but this can be actually put in place within 2, 3 years and it doesn't require significant investment. It's not more than $20 million, which will be paid off very quickly, right, based on the scale of the launch in the U.S. In addition to that, we can also find a CMO. I mean, there are many choices in the U.S. And in terms of resources, we have a dedicated team anywhere already, which is working with CMOs because we are using, as a matter of fact, for a number of products already CMOs. So we have a resource to support eventually movement of manufacturing to U.S. So I don't see an issue with that. Yes.

Jack, just to offer to supplement the questions. [indiscernible] So we have some already for [indiscernible] during the first quarter of last year, we actually are [indiscernible] manufacturing site for the lenalidomide [indiscernible] So the products that we are [indiscernible] actually manufactured so we do not really [indiscernible] from the gross margin with the cost increase from [indiscernible] manufactured products [indiscernible] back for the same product. We have the experience and know-how to make the transfer necessary [indiscernible] time and [indiscernible] We don't believe [indiscernible] is going to be much more expensive [indiscernible].

Understood. And also let me read off just a question that came in from online. So I'm glad to see the first quarter growth results. And just curious in terms of -- especially for the Asia growth numbers, I'm just curious in terms of how much of the growth for the Asia revenue are inorganic versus organic. So what kind of growth rate could we expect for 2025 and also organic growth for the 2026 going forward for Asia?

[indiscernible]

And also I think another question we have here is asking in terms of -- I think, Bjartur presented a lot of pipeline progress that we have made and expect to make in the U.S. this year. I mean, are we seeing -- or are we observing any sort of impact from the recent FDA -- announced FDA changes both in leadership and also kind of the head count announcements?

I'll take this question. I mean, so far, we haven't seen any adverse impact. But of course, this is a general concern for the industry. The good thing, I think, is that, obviously, we are focused on products, which will reduce the health care cost, right, of generics in the U.S. And what we have been reading between the lines is that FDA will obviously prioritize reviews of such products and even shorter, sometimes, the approval review process.

I see. Understood. I guess this is kind of for me in terms of a follow-up. So I just -- I do recall that I think for last year, in the fourth quarter, there was, I think, assets [ LP 797 ] potentially have pilot readout in third quarter this year. And I'm just curious in terms of like the study, if you could share more in terms of the study design, what kind of data package that we were planning to file with. And with potentially the increasing regulatory requirements from the U.S. FDA, whether it's -- what kind of endpoint they may allow or the comparison in order for approval. I mean, do we see anything to worry about there? Or do we see risk with the study trial -- study design might need to be modified or things like that?

Yes. I mean we have, as a matter of fact, actually pilot study results already and they are positive, we are passing. And this gives us the confidence, basically, we are now proceeding with the -- because you have to do 1 study for markets outside U.S. We call it the European study, but you can use this for Asia as well, it's acceptable. One study specifically for U.S., which will start after the outcome of the European study. Although we have pilot study results positive, of course, there's always risk for study to fall. This product also in terms of pharmacokinetic is very -- is highly variable, which always increase the risk. But I mean, our team is quite confident that this will be a success at both the European development as well as the U.S. development. So objective is to file the product in January in the U.S., right? And like we said last time, we have a very strong interest from 3 large companies. This is in the U.S. 505(b)(2). Product outside the U.S. is not considered as 505(b)2. And I mean, we hope that everything will go well. So this is the data that I can give so far.

Understood. And I have another question. I think, here, if you -- could you elaborate more on the deal with LENZ therapeutics that was announced earlier this month. The deal size seems fairly sizable at USD 125 million compared to kind of the previous deals that we've made. How do we look at -- how do we assess in terms of the market potential of the drug and any more details from the deal that you could share?

Yes. I mean, the deal -- I mean, you cannot benchmark here with the previous view because it's a different model here. In this particular deal, we have -- we are in-licensing product with manufacturing rights also. So the product is -- obviously, they have already existing supply chain. They're using a few CMOs, which we can use. But if we want, we can also choose our CMO and own choice and transfer the product. So the product has significant potential. It's really, we think, a game-changer therapy for presbyopia patients. And obviously, this is reflected in our business case, which justified the deal for the Board. And basically, you have, just as a structure, fixed licensing fee in addition to the royalties, which are payable based on if they reach milestones as achieved sales, and this is obviously how you end up to this number, right? So this is not an upfront payment, just to be clear. And so if the product goes into the full potential, this is going to be obviously the licensing fee, yes, achieving all the commercial milestones. I mean, we hope so, right? It will be still an amazing deal. And we really -- we are very excited with this product.

Understood, understood. And I think just one more question before we close the call. I mean, you mentioned earlier in terms of the launch for the nintedanib is a fairly key item in our operation this year. Could you kind of just update us a bit more in terms of where we are and kind of the progress in Thailand expected for this year for its launch?

Yes. We have -- basically, we have done a successful validation of the product, which is obviously a prerequisite for the launch. This is most important. It's a complex product from manufacturing being soft gel oncology, but based on what we have seen during the validation, we have a very robust manufacturing process, robust product. And we have already scaled up successfully also the product, the batch size, which will provide more efficiency and also reduce the cost of goods. And I mean, now we are obviously working with our partners to -- for necessary additional documentation valuations and -- sorry, we are effectively, I think, ready to go. And so far, everything goes as per the plan.

Understood. So yes, as we are closing up to the end of the call, I'll pass the mic to Petar and Bjartur for any closing remarks for the company.

Yes. Thank you. Thank you very much for your time again. And like I said at the beginning, we are really happy with the strong year in terms of sales and earnings. But I think more importantly, I think we are progressing extremely well on paving the way for future growth with all the activities on the pipeline, commercial execution and also launches and filings and approvals. So we are quite excited, and looking forward for having a very successful 2025 and beyond. Thank you very much.

Thank you, Petar. Thank you, Bjartur. And thanks, everyone, for joining. And this will conclude the call for today.

Thank you very much. Thank you. Bye.