Orion Oyj ($ORNBV)

good afternoon, and welcome to Orion's Q1 2026 Results Webcast and Conference Call. My name is Tuukka Hirvonen, and I'm the Head of IR here at Orion. In a few moments, we will kick off with the presentation by our CEO, Liisa Hurme, after which you will have the possibility to ask questions either from Liisa or from our CFO, René Lindell. We will be first taking the questions through the conference call lines. And after that, we will turn on to the webcast chat function. So you may also type in your questions using the chat function of this webcast. And to our Finnish-speaking viewers event is held in English. But afterwards, later this afternoon, you will find a finish interview of Orion's CEO, Liisa Hurme on Orion's website. And just before letting Liisa to step in, just a reminder about this disclaimer regarding forward-looking statements. With these words, I'd like to hand over to Liisa.

Thank you, Tuukka, and good afternoon on my behalf as well, and welcome to listen Orion Q1 2026 results. Some highlights from this Q1. All our businesses performed solid in a solid way and very well, I would say so. And we also have good news regarding our clinical pipeline. We've been granted -- ODM-212 has been granted orphan drug designation in mesothelioma by FDA now in April. And we also started a new Phase Ib/II study called TEADCO which is a basket trial evaluating ODM-212 in combination with standard of care treatments in patients with selected advanced solid tumors. And I will talk more about that later on. Also, we have strengthened our executive team with an appointed with Berkeley Vincent as an Executive Vice President to lead Innovative Medicines division and as a member of my executive team, as of April 8th. So let's look at the financials. Net sales, a healthy growth of almost 18% compared to the previous year's quarter 1. Also, operating profit grew 47%, which brought us to operating profit margin of 27.5%. And earnings per share increased 47%. Looking at net sales in more detail. Innovative Medicines drove net sales growth with royalties and tablet sales. But as I already mentioned, all the divisions are performing well, of course, in relation to the size of the division. So branded products growth was EUR 5.2 million, generics EUR 1.9 million; and Animal Health, EUR 1.1 million. And even Fermion external sales grew EUR 1.8 million. ending up to EUR 480 million of net sales during Q1. And the operating profit consists, of course, the royalties here in the Column 3, close to EUR 41 million and change in sales volume of EUR 21 million. We, of course, see some effect on decreasing prices, as we usually see the biggest product suffering of this are, of course, Simdax and Dexdor, but there are the generics as well. This comprises comprises of EUR 9.3 million. That also includes FX and changes in cost of goods. No major milestones received in Q1, and then we also see increase in our fixed cost. And thus, our operating profit was close to EUR 150 million during Q1. Now to innovative medicines. The division growth was close to 54%. And here, we can see the Nubeqa royalties and tablet sales. of EUR 145 million, close to EUR 145 million, some other business of EUR 5.4 million, which is usually sales of services to our partners resulting EUR 150 million of net sales. And as we remember from the previous years, we start with the lower royalty rate from Bayer in the beginning of the year. So the royalties are tiered during the financial year. And we see in Q1 clearly lower income of Nubeqa compared to the last quarter of previous year, but clearly, a higher revenue, Nubeqa revenue compared to the previous years. quarter 1. And royalties were EUR 95 million and tablet sales to Bayer, EUR 50 million. Branded products, close to 7% growth compared to previous year with EUR 82.2 million. Easyhaler continues to drive growth in this division, especially budesonide-formoterol as the recent changes in treatment guidelines from last year favor the use of combination products over the mono products. And we've been able to really increase our sales according to this new guideline. And the good growth momentum in women's health therapy area continues with the HRT products. Generics and Consumer Health, 1.4% growth. It's according to market growth, maybe slightly below that, but this is only 1 quarter, and we all know that this is really a very wide portfolio in many different geographies. So this is a very good achievement for the first quarter. And animal held 3.3% growth. Of course, booked again a very wide portfolio, both for companion animals, and livestock and a global portfolio and the growth comes from all of the different geographies in both segments or both units. When we look at the top 10 products, of course, we see the Nubeqa as we discussed, driving the growth; Easyhaler, 7% growth; Entacapone slightly minus compared to the previous year's quarter 1. But this is mainly, again, timing issue of deliveries to different regions and different partners. Same goes with the Dexdor -- and the Animal Health DDA portfolio number 4 here, which grows almost 11%, and that is, again, a result of deliveries living during Q1. And as I mentioned, women's health continues good growth trajectory with almost 15% growth. [indiscernible] slightly decreasing, almost 6%. And that's also a kind of more of a timing issue and depends on the season. But then we see 3 of our generic trend, [indiscernible] which have a very, very healthy growth. This is partly due to the previously mentioned timing of deliveries to our partners but also showing that, for example, [indiscernible] is a golden standard treatment. -- globally used both in cancer and autoimmune diseases and also solid position in our top 10 products. And Simdax, as I already mentioned, facing a heavy generic competition. in Europe. Now Innovative Medicines during the quarter 1 comprised 36% of our net sales and generics 32% and and branded products 20%. Animal Health and [indiscernible] together were 11%, 12% of our net sales. Our clinical development pipeline has now -- the list is now a bit longer with the new combination study for ODM -- but I'll go through the list to remind us what we have now going on. So the two 1st ones are studies on Nubeqa, the desal hiccup for the N1 use of darolutamide in prostate cancer, [indiscernible] for the biochemically reoccurring prostate cancer. Omaha 3 and 4 studies for metastatic castrate-resistant prostate cancer with operesorstat molecule that Orion has developed and then out-licensed to MSD. Then a bit of an odd product on this list, which is otherwise oncology products or molecules is [indiscernible]. It's a old classic from Orion's portfolio, the same molecule as we have in Simdax and that's developed for pulmonary hypertension, and there are 2 Phase III studies ongoing with that by our partner Tenax. Then 2 Phase II studies, again, with opevesolstat for women's cancers like breast, endometrial and ovarian cancer -- MSD -- by MSD. And this is, of course, to test whether this mechanism of action would also work for hormonal cancers in women. [indiscernible] is still ongoing. That was the Phase II study that was used when the Phase III studies with open vessels that started. So the results of that study were used for planning of that -- those Phase II. TDS is a monotherapy study, a Phase II study for ODM-212 for malignant pleural mesothelioma, and also for epithelial hemangioma in dotelioma. These are 2 very rare cancers, solid tumors, and we think that this molecule based on its mechanism of action, should have a direct antitumor activity to these cancer types. And the newest addition [indiscernible] to combinations. The indications here, the cancers are mesothelioma, non-small cell, lung cancer and pancreatic cancer. Here, we are combining ODM-212 with some known drugs that are used for these specific cancers. And we use the other kind of a mechanism of the inhibition, which would fight for the drug resistance or prevent the drug resistance, that patients usually throw to these currently used treatments. Sustainability, as another topic, some key figures of Orion sustainability programs. We've been able to decrease our greenhouse gas emissions by 13%, and this is scope 1 and 2, so doesn't include the Scope 3. Our injury rate is 4.9%, and there is clearly room to improve there. For this year, we have very ambitious targets for LTIF. And then 2 things regarding more of a kind of code of conduct or how we operate within old copper company and with our suppliers, this has to do with the code of conduct. In Orion, 98% of our employees have carried out or done the training for code of conduct. Also, we do this code of conduct training and agreement with our suppliers, and 96% of our suppliers are also adhered to code of conduct, our third-party code of conduct practices. We have specified our outlook for this year. We gave our outlook in January. And now after Q1 when 1/4 of the year has already passed. We are a bit more wiser, and we are able to increase the lower limit of our range by EUR 50 million, both on net sales and operating profit. So the net sales range was EUR 1.9 billion to EUR 2.1 billion in the original outlook, and now it's from EUR 1.95 billion to EUR 2.1 billion. And same with the operating profit, which was previously EUR 550 million to EUR 750 million, and now it's from EUR 600 million to EUR 750 million. And here are some upcoming events for this year. And I think at this point, I thank you for your attention, and I think it's time for questions.

Yes. Thank you, Lisa, for the presentation and set up for today. And now let's turn on to the question. We will first start with questions on the conference call line. So at this point, I would like to hand over to the operator.

[Operator Instructions] The next question comes from Alex Moore from Bank of America.

Two for me, both on Nubeqa. So you previously mentioned a quarterly royalty reporting can be impacted by last plant estimates and some reconciliation effects. I was just wondering for Q1, is there any particular conservatism or phasing assumptions baked into your sales estimate for March? And then separately, can you give me high level color on whether the reconciliation for sales in December was meaningfully positive or negative in terms of impact on your reported royalty for the quarter. And then secondly, based on your current assumptions for full year sales run rate and tiered royalty rate, do you see consensus expectations of around 50% growth for Nubeqa sales this year as achievable?

Yes. Maybe I can take that one. So I'll start first with basically December numbers. So -- we always try if possible to close the year with the actual reports and that we managed to do last year. So there was no reconciliation or overflow from '25 to '26. Naturally, as we said in the last month of the quarter, within the year are based on estimates that we then have and the latest data we have, and then we'll be update in the second quarter, and then we will discuss that, of course, in Q2, but we are not giving details between in between months of how the Nubeqa accruals and actuals go. And then, yes, we are very happy, of course, that Bayer is also optimistic on the full way of Nubeqa. And so are we. And of course, we do our own scenarios and try to make a balanced outlook for the year that includes various scenarios. But other than that, not commenting on Bayer's estimates.

The next question comes from Sami Sarkamies from Danske Bank Markets.

I have 2 questions. Starting from the guidance upgrade, I think you mentioned that you were just wiser after Q1. Can you specify was the upgrade just based on Q1 performance? Or have you also upgraded assumptions related to the rest of the year?

Yes. Maybe I can comment that. So as Liisa said, of course, we have 1 quarter behind us, and that was solid across the businesses. And also, I think Nubeqa performing very nicely in the numbers and in the market. So I think it's a general -- I think if we look at really the lower boundary, we also see that the probability for that old outlook, lower limit starts to be quite low and made sense to raise that lower limit to a bit higher. And when it comes to other aspects, some also effect from the fact that we have a little bit more information on the U.S.A. tariffs for pharma for this year that the impact would be early as for October quarter. And that -- as that information came through that also reduces a little bit of the downside risk, although being said, it is still something of which is then end of the year, what the impact will be, if any, at that point of time.

Okay. And then my second question would be related to Nubeqa product deliveries. This grew only 30% in Q1. I think they were also a bit small in Q4. So should we just assume that inventories at Bayer have become lower in the last couple of quarters, and these product deliveries will pick up at some point in time during the rest of the year. .

Well, I think the public deliveries from Orion to Bayer is not a very good, I would say, not a very good lead indicator how Nubeqa sales would develop or how the inventories that the supply chain is really, really long if you think the global supply chain. So it's -- I would advise not to look at that tablet number or tablet sales. We ship according to Bayer's forecast. Of course, here for the shipments there is the same factor than for any other shipments that sometimes they leave on a certain -- last day of a certain month or then first day of the next month. So there might also be a big change or big differences depending on when the shipments leave Orion. So that's not a very good and reliable indicator for prognosing inventories or future sales.

Perhaps I can continue here a little bit that we do expect for the full year that we will have higher tablet deliveries than what we had in Q1. So it wasn't yet I think, representative of the average level.

Yes, this is exactly what I mean. And yes. .

Okay. And then, actually, I have one more question regarding the new combination study for ODM-212. Can you tell a bit more about the study, how many patients were recruited? When are you expecting readouts? And then it would be interesting to hear what is currently the market for the drugs that you will be combining ODM-212 with?

Well, I think I'll start with the studies. These are not huge studies. I don't have the exact number of patients unless my colleagues here have that. But let's remember that both of these indication, even though they are big ones. So we are now carrying out Phase Ib/2. So we are even first trying different dosing with some of the combined drugs. So -- and for the results and readouts, I would be on a safe side to say that we can expect those during '28. And the markets for the drugs that we are combining I'm not going to share here the market details of those drugs, but those are listed the ones that we combined with, are listed in the press release currently.

Okay. So assuming additional studies for these patients. .

Yes. .

Are these blockbuster products?

Oh, yes. Indeed, some of them are.

They are but then again, 1 needs to remember that their indication may be wider than the one we are targeting with this combination. So we have listed the active ingredients in the press release we announced earlier this morning. So with that, you can definitely find out the brand names for these products. But again, please bear in mind that their indication may be wider than the one we are targeting with these trials. .

Okay. Thank you. I don't have any further questions .

The next question comes from Matti Carla from OP Corporate Bank.

Firstly, about Royal delay. So what about during this Q1. Is it comparable what we saw last year, first quarter? Or is it higher as now share as, of course, from Q1 last year?

Apologies, Matt, the line was a bit bad right now. There's somewhat echo. Could you please repeat your question.

All right. Hopefully, it's better now. Yes, I was asking about the royalty rate during the Q1. So is it at the same level than last year? Or is it higher now as the Nubeqa sale has grew from last year.

I don't think we comment on the royalty rates in that perspective as to where the tier breakpoints or so you'll have to probably wait for that calculation to be done a bit later during the year. Growing faster compared to previous year, we will be reaching the higher tiers earlier than last year. So in that sense, in Q1, also probably the average is somewhat higher than last year.

All right. Maybe then another question regarding the sales and marketing costs as they've been increasing. So could you roughly say how much there is slightly actual costs? And how much are the royalties? These are kind of causing the cost growth.

Yes, of course, and he royalties are paying a role in their their part, but also we have added sales force also to support, especially branded products in some European countries. So you will see both effects there visible that, of course, with Nubeqa growing quite a lot from last year's Q1, then, of course, those would be also visible in the sales and marketing.

Okay. And one more question regarding the R&D pipeline. So as you did have said that there is this one kind of the old study, which is not covering oncology. So I think it was last year exactly when you were riding this Tmax study in your pipeline. And could you remind us what was the reason to add that study back then to your pipeline? Why it was not their priority a year ago, you want to resolve?

Yes. That's a very good question, and thank you for asking so that we can remind I think that was the time when [indiscernible] started the Phase III program for pulmonary hypertension. They had been working with levosimendan for a while, doing some confirmatory studies, but that was exactly the time when they were able to start the first study and then eventually later on last year, they started the next study or the second study for pulmonary hypertension. So there is no other reason for that.

[Operator Instructions] The next question comes from Anssi Raussi from SEB.

I am Ssian from SEB. One question from me regarding Nubeqa\. So when we think about this early-stage indication for Nubeqa, what would be a reasonable time line to expect that you would expense for you because I have understood that Bayer is fully responsible for the development for now.

Indeed. This relates to the industrial hiccup study and the readout for this study, if I remember correctly, it's '28.

Estimated in '28.

Estimated in '28. I think that the latest point for to jump in and use our octane would be when we see the results of the study

The next question comes from Iris Theman from DNB. Carnegie. .

I have just 1 question. So what pipeline is do you expect in the next 12 to 18 months?

Well, I'll start with our ambition to start Phase I study, at least one Phase I study with our biologics during this year, by the end of '26. And then if you ask for the next 12 months, of course, then we won't entering clinical stage. So I think those are the one -- the major initiations of new projects. And then regarding the results, no major results that we would be expecting this year.

With the exception of the LEVEL trial -- Phase III trial by [indiscernible] in Q3 this year.

Yes. Thank you, Tuukka. But then in '27, the [indiscernible] will -- there will be a readout for [indiscernible] in '27. Then again, -- what else did we have in '27?

Current estimate for the women's trials with [indiscernible] start current estimate is in the end of '27. We'll see how that pans out, and also for our first ODM-212 Phase II, so with the mono monotrial current estimate is also in the end of '27, but it may move either direction, depending on recruitment rates and so forth.

Okay. And anything about peseta ODM tit for prostate cancer.

Readout for both of the studies is '28.

Yes. The estimated final readout is in summer '28 for both of these trials.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you, operator. Then we'll turn to the webcast questions. So again, you still have the opportunity to type in your questions by using the webcast chat, if you wish. We hear 1 question coming from Shan Hama from Jefferies. So Sean is interested to hear that could be please? -- provide an update on OpEx timing. And if we could still see interim data this year following Merck's comments in '25 ASCOs last year.

Well, I think I can only repeat what we -- we said a minute ago that the readout for both -- the readouts for both of the studies are estimated to happen in -- and regarding any interim results or interim analysis, I don't have information on that. So that should be asked from MST.

Exactly. Thank you, Liisa. So we have no further questions wither from the webcast, and I think that we don't either have any follow-ups on the conference call line. So I think it's time to wrap up and some closing words if we wish, Liisa.

Yes. I thank you for your attention and very good questions. And of course, I hope that you will be attending our upcoming events this year and have a nice rest of the day. Thank you.